Strike Causes Heavy Loss to Venezuela

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Last updated at: (Beijing Time) Friday, January 03, 2003

Strike Causes Heavy Loss to Venezuela

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The month-long general strike has cost the Venezuelan government well above one billion US dollars each month in lost income, and is expected to delay the payment of the public debt or public sector salaries, officials said Thursday.

"The government has its back against the wall from the fiscal point of view. It means the only measures with which there could be a temporary solution are those that in the short run could be dramatic," Francisco Rodriguez, top economic advisor to the National Assembly, was quoted by the local press as saying.

The strike, which is choking oil exports and government revenues in the world's fifth biggest oil exporter, is led by businessmen and trade unions demanding President Hugo Chavez quit or call early elections.

This situation will translate into a reduction of the composite budget for debt servicing, regional fund-transfers, universities and the cancellation of public administration payments.

Another alternative is for Venezuela's central bank to issue more currency beyond the normal level, thus allowing financing through fiscal deficit, something that would not be legal or constitutional, though.

On the possibility of increasing taxes to finance the fiscal deficit, the congressman said there were limitations of such a scheme because the paralysis of most of the economy diminishes the tax collection.

Chavez, who was elected in 1998 and survived a coup in April, has held firm so far against the shutdown strangling oil production and exports in the world's fifth petroleum exporter. He told reporters during a visit to Brazil that full oil operations would be restored "in a few weeks."

But oil strike leaders said that even if the shutdown was lifted, it would take at least four months to return to normal operations.

The opposition has said it will step up street protests in January, including possible marches to military headquarters in Caracas and the presidential palace.

A march to the palace in April ended with 19 people shot dead, triggering a brief coup that ousted Chavez for 48 hours.

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