Venezuela Aims to Save $2.5 Billion by Curbing Foreign Travel

The government of Venezuela hopes to save $2.5 billion this year by cutting the foreign travel allowance to $2,500 per person with effect from January 1, according to the head of the Foreign Exchange Administration Commission (Cadivi).

The reduction in the personal allowance was announced shortly before the festive break as an emergency measure to confront a widely expected fall in state revenues in the wake of falling world oil prices and demand.
However, critics see the projected saving as a drop in the ocean compared with he likely fall in the contribution of oil export earnings to the national finances this year.

They see the measure as a populist gesture in response to growing awareness that the oil slump induced by the global financial crisis will inevitably have an impact on Venezuela’s economic wellbeing, and is already doing so.

The government is deemed to have been slow off the mark in responding to the knock-on effect of the crisis on not only the oil sector but also the economy as whole – and budget spending in 2009.

The 2009 budget was based on the assumption that the price for Venezuela’s mix of medium-grade and heavy crude would average $60 a barrel.

The reality is that the price is now estimated to be down to not much more than a third of the forecast. However, Finance Minister Ali Rodriguez Araque has declined to make any adjustments, and the budget legislation has been approved by the National Assembly, leaving it to President Hugo Chavez to make cuts later this year.

Latin America Herald Tribune