CARACAS (Reuters) - Venezuela’s 2015 budget will be based on a target oil price of $60 dollars per barrel, President Nicolas Maduro said on Friday night, but he repeated expectations that prices will recover.
Venezuela routinely underestimates oil prices when planning its budget to permit more spending later with fewer budget restrictions. The OPEC country’s 2014 budget proposal also put oil prices at $60 dollars.
Oil has dropped more than 25 percent since June on strong supply, signs of weak demand growth and indications that key oil producers, particularly Saudi Arabia, have a limited appetite to cut output to bolster prices. U.S. November crude settled at $82.75 on Friday.
But Maduro reiterated that he thinks oil prices will rebound and stressed the socialist government’s popular social programs will not suffer cuts, according to state news agency AVN.
“There will be no catastrophe or collapse here,” he said, slamming “nation-hating” right-wingers who he said are hoping the drop in prices will bring down his government.
“Look, oil could fall to $40 dollars and I would guarantee the people all their social rights, their rights to education, to health, to food, to life.
“We have the financial capacity to finance in (local currency) all the projects the population needs,” he said, adding the budget will be presented to the National Assembly next week.
The price slide could not have come at a worse time for cash-strapped Venezuela, which is already grappling with an economic slump, annual inflation running above 60 percent and currency restrictions that have led to widespread shortages.
“We’re tightening the screws so that not one single dollar is spent on what it shouldn’t be spent on,” Maduro said.
The South American nation last week became the first member of the Organization of the Petroleum Exporting Countries to call for an emergency meeting to arrest the fall.
Maduro repeated on Friday that the U.S. was seeking to flood the global oil market to destabilize Russia and stressed the need for OPEC to meet before the scheduled Nov. 27 gathering in Vienna.
“I’ve already requested ... that OPEC hold an extraordinary meeting so that it understands the situation and that we take decisions in defense of the market and oil prices,” he said.
OPEC is unlikely to call an emergency meeting as proposed, two sources told Reuters this week.
Reporting by Alexandra Ulmer; Editing by Ken Wills