Venezuela will suffer if world oil prices keep falling, President Hugo Chavez said on Wednesday, in an unusual acknowledgment of how the global financial crisis is hurting the OPEC nation.
Venezuela, one of the largest oil exporters to the United States, is a price hawk in OPEC. The government relies on crude for about half of its revenue, which it spends freely on the majority poor.
Chavez has accumulated foreign reserves and organized loans from nations such as China to shield his socialist government from a protracted fall in income. But economists say he may have to slash spending if the oil price, which was at a 20-month low on Wednesday, remains low deep into next year.
“The price of oil has been coming down as a result of the global crisis,” said Chavez, who faces tough regional elections this month. “This is a factor that, if it carries for an extended time, could affect us. Certainly it would affect us.”
Chavez initially reveled in the financial collapses in the United States. But as the crisis has widened to hit economies worldwide and caused oil prices in recent weeks to plunge he has begun to warn Venezuelans of the possible impact at home. (Reuters)