Venezuela’s Maduro Plans To Slash Spending as Oil Price Drops

CARACAS—Venezuelan President Nicolás Maduro announced plans on Friday to cut public spending, beginning with his own salary, as the price of oil continues its slump.

The slide in crude prices of more than 30% since the summer has added a new layer of concern for Mr. Maduro, whose popularity, polls show, has dropped to a record low. The South American country is struggling with soaring inflation as well as a dollar crunch that has led to shortages of food and consumer goods.

Venezuela’s basket of heavy crude and petroleum products tumbled 89 cents to end the week at $68.08 a barrel, the lowest in more than four years, the oil ministry reported.

“I don’t take this blow from the drop in oil prices badly,” Mr. Maduro said in a televised address to industry workers at the Miraflores presidential palace. “I take it as an opportunity to end superfluous, luxury, unnecessary spending.”

The president said he would create a committee to formulate a proposal for a “substantial reduction” in spending, beginning by revising pay for heads of government ministries and state-run companies, a move he said would set an example. Mr. Maduro didn't offer specific figures for how much he was looking to reduce spending. But he received a standing ovation after asking workers for their support in the effort.

It isn’t hard to find bloat in the government’s budget, Mr. Maduro said. “The purchase of who knows how many cars and trucks…I ask: Is this really necessary?”

There will be no cuts in the social programs that have kept the ruling socialist party popular among Venezuela’s poor, Mr. Maduro promised workers.

He also reiterated that his finance minister, Rodolfo Marco, will soon head to China to seek more financing from the country, which has pumped nearly $50 billion in loans into Venezuela since 2007.

Turning to allies like Russia and China for aid may be part of a series of “disorganized and unpredictable” actions that Venezuela is likely to take as it scrambles to raise funds, analysts at GlobalSource Partners said in a report Friday. The government may also look to further reduce imports to ration scarce dollars, the analysts said.

Friday’s announcement follows a series of tax increases on luxury goods authorized by Mr. Maduro, a move widely characterized by analysts as unlikely to do much to help shore up state finances.

Prices of Venezuela’s bonds, which are the highest-yielding in the developing world because of the perceived risk, continued to drop Friday on concerns that the country’s economic woes and oil’s decline could lead to a default. Venezuelan officials, however, insist that they have the resources to honor their obligations.

On Thursday, Venezuela failed to convince fellow members of the Organization of the Petroleum Exporting Countries to take measures to prop up oil prices at the group’s summit in Vienna. But Mr. Maduro said his government will continue pushing for $100 a barrel, which they say is fair price for the commodity that makes up 96% of their hard-currency income.