Chavez Says Venezuela Economy to Face Difficult Years

Venezuelan President Hugo Chavez said his country’s economy will face difficult years ahead as the world financial crisis expands and demand for oil, Venezuela’s principal export, wanes.

Venezuela is prepared to confront the crisis and should restrict spending to strictly necessary items while saving as much as possible, Chavez said in comments on state television. “The world is in crisis,” he said. “It hasn’t hit Venezuela yet, but we can’t say that a crisis of this magnitude, depth and impact won’t affect us. The economy will go through difficult moments in coming years without a doubt. But Venezuela has what it takes to navigate through the storm.”

Venezuela, the biggest oil exporter in the Western Hemisphere, depends on oil for 90 percent of its export revenue and 50 percent of its government spending. Chavez has called on his government to follow an “austere” budget next year and to reduce spending.

The Venezuelan oil basket, a benchmark of prices for oil exports, dropped 12.9 percent last week to $34.49 a barrel on Dec. 5, according to the Energy and Oil Ministry which publishes the basket price each week. The price for Venezuelan oil has plunged 73 percent from a record in July.

Venezuela’s economy is slowing after years of growth. The economy expanded 4.6 percent in the third quarter from a year earlier, the lowest rate in five years as annual inflation accelerated to a five-year high of 36 percent in September.