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Nation Seeks to Cope With Sharp Drop in Oil Revenues : Venezuela Unveils Economic Plan

March 19, 1986|Associated Press

CARACAS, Venezuela — Higher wages, more public spending and future sales of dollars are among the steps a government commission recommended to foster economic growth and reduce Venezuela's dependence on oil, according to a report Wednesday.

The Commission for the Reform of the State presented its suggestions for long-term economic planning in a report summarized in the daily newspaper El Universal.

The group said that despite the expected drop in oil revenues this year, there is still "an ample margin to increase aggregate demand without confronting problems of external strangulation."

Petroleum sales, which account for 90% of Venezuela's foreign exchange earnings, were originally expected to reach $12.6 billion during 1986. However, the drop in world prices has brought that estimate down by as much as $5 billion.

According to the commission's report, if oil revenues were to total $9 billion, and imports were restricted, Venezuela would still maintain "its unique position as the only Latin American country with a surplus in its external current account."

The group advised that the government take a number of steps to increase aggregate demand and stimulate domestic production.

One of these would be greater public spending. The funds should come out of the current budget surplus and not by increasing taxes, the report said.

Current plans call for non-budgetary government spending of $866 million during 1986, as well as a three-year plan totaling $5.06 billion.

Non-budgetary government spending refers to what the government calls "programa adicional de inversiones" (additional investment program), designed to reactivate economic growth.

The commission also said that if unemployment cannot be decreased from its current level of 13.3%, salaries should be raised, first in the public sector and then in private industry.

Venezuelan workers in January received a raise on a sliding scale of 10% to 20% for workers earning less than $800 per month.

By way of stimulating production for export, the commission said Venezuela should provide fiscal subsidies for exports, while cutting down on imports through increased customs duties.

Imports to Venezuela totalled about $7 billion in 1986. The government announced last week that it would cut public sector imports by an estimated $670 million.

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