Venezuela Government: Minimum Wage Hike To Cost At Least VEB634 Billion

CARACAS -(Dow Jones)- Venezuela 's 20% minimum wage increase, announced last month, will cost the government at least 634 billion bolivars ($1=VEB847.13), the National Assembly's Finance Commission President Rodrigo Cabezas said Thursday.

The increase for public-sector minimum wage earners will cost about VEB334 billion and accompanying pay rises for other workers will cost about another VEB300 billion, Cabezas said during a press conference on the government's economic forecasts.

The funding for the salary hike may come from above-budget oil revenues, given a recent rise in the average annual price to a bit above $18 per barrel this week, Cabezas said.

Every $1/bbl increase in the average annual price puts about another $1 billion a year in the country's coffers.

The minimum wage increase, to VEB190,080 a month from the current VEB158,400 a month, will also apply to retirees, and is effective May 1 .

Cabezas said the government "could review" its standing with the World Bank, the Interamerican Development Bank and the Andean Development Corporation, with a view to borrowing any budget shortfall this year.

He declined to estimate the shortfall but said the government will be announcing up to 8% in spending cuts next week.

Cabeza's comments follow those of National Assembly Economics and Finance Advisor's office director Francisco Rodriguez, who predicted a likely $4 billion shortfall in this year's $35 billion budget.

Separately, Cabezas said the government is now forecasting the country's $110 billion gross domestic product will grow between 0% and 1% this year.

Chavistas Still Committed - While Chavez Accumulates Power

Venezuelan Workers Confederation President Carlos Ortega gives a news conference at his office in Caracas, Venezuela, Saturday, April 20, 2002. "If we Venezuelans can't reach some kind of agreement, we are headed, unfortunately, painfully and irreversibly, toward a civil war," Ortega said. (AP Photo/Gregorio Marrero)

Venezuela Eyes $350 Million From FIEM To Ease Cash Crunch-Report Thu Apr 25, 2002 -[Full Text] CARACAS -(Dow Jones)- Venezuela 's central bank approved a $350 million transfer to the treasury from the Macroeconomic Stabilization Fund, or FIEM, to help ease cash-flow, local daily El Nacional reported Thursday. The transfer needs congressional approval but the National Assembly's Finance Commission head, Rodrigo Cabezas, said he hasn't been informed about it yet, according to the report.

The FIEM is a rainy-day fund that, in the last two years, absorbed half of Venezuela 's oil revenues above budgeted levels. The account, which had $5.59 billion as of Apr. 23 , isn't expected to get any deposits this year as a result of a new law.

The planned transfer follows comments Tuesday by an official who suggested the government start talking to multilateral lenders about borrowing as much as half of what he estimates will be a $4 billion shortfall this year. The remainder could come from debt markets once lenders like the International Monetary Fund have approved loans for Venezuela , National Assembly Economics and Finance Advisor's office director Francisco Rodriguez said.

This year's $35 billion budget was first drawn up with expectations that Venezuelan oil would fetch an average $18.50 a barrel.

As oil prices dropped earlier this year, officials amended the average price expectation to $16/bbl and have promised to cut spending by about 7%.

Thus far, however, the government hasn't made any specific cut backs. [End]

El Nacional Website: www.el-nacional.com

Venezuela To Borrow Half Of $2 Billion For Tocoma Hydro Elec Dam (Dow Jones) CARACAS -(Dow Jones)- Venezuela hopes to borrow, from multilateral lenders and other institutions, half the $2 billion investment for the final part of its Lower Caroni hydroelectric power project, the government's Venpres news agency reported late Thursday. - Apr 26, 2002

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