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World

Venezuela's Maduro Signs 2017 Budget, Bypassed Congress Cries Foul

Not consulting congress on Venezuela's debt plans for 2017, which are meant to be presented in tandem with the budget, could spook bondholders, including those considering an ongoing debt swap offer by state oil company PDVSA

Venezuela's President Nicolas Maduro (C) attends a ceremony to sign off the 2017 national budget at the National Pantheon in Caracas, Venezuela October 14, 2016, photo: Reuters/Miraflores Palace
By Reuters Whatsapp Twitter Facebook Share
1 year ago

President Nicolás Maduro on Friday signed off on Venezuela’s 2017 budget, drawing fire from the opposition-led National Assembly which accused the unpopular leftist leader of despotism for bypassing the legislature.

The Supreme Court on Wednesday allowed Maduro to put forth the budget without lawmakers’ approval, overriding a constitutional obligation.

The opposition, which is trying to unseat Maduro as Venezuela wrestles with a deep economic crisis that has families skipping meals, says the government is trying to undermine it to keep its grip on power.

“I have the 2017 budget ready!” Maduro told cheering red-shirted supporters, as he held up the document and vowed to pour money into social projects, pensions, and salaries for public servants.

“Long live the people! Long live the civil-military union! Long live the support from the streets!”

The budget is around 8 trillion bolivars, roughly $8 billion dollars at the black market exchange rate and almost six times this year’s budget amid raging inflation.

“BURYING THE CONSTITUTION”

The opposition said the budget lacks legitimacy as it is to be approved by the Supreme Court’s constitutional chamber, rather than by the national assembly, as the constitution stipulates.

“They’re burying the constitution, which will very soon recover thanks to the recall referendum,” said opposition lawmaker Jose Guerra on Twitter, referring to a push to remove Maduro via a plebiscite.

Not consulting congress on Venezuela’s debt plans for 2017, which are meant to be presented in tandem with the budget, could spook bondholders, including those considering an ongoing debt swap offer by state oil company PDVSA, analysts said.

A future government would have a “strong legal argument” that debt contracted in 2017 would not be legitimate because the National Assembly did not sign off on the Annual Indebtedness Law, Francisco Rodriguez, chief economist at Torino Capital LLC, said in a note to clients this week.

Maduro said the OPEC nation’s budget put the price of oil at $30 per barrel next year. Venezuela routinely underestimates oil prices when planning its budget to permit more spending later with fewer budget restriction.

“We’ve put the oil barrel’s price between low and moderate, although we know it’s going to recover,” added Maduro, whose government has been pushing for an OPEC deal to boost prices of its key export.

EYANIR CHINEA
ALEXANDRA ULMER

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