Chavez urges Venezuelans to save amid crisis

  • Business
  • Thursday, 18 Sep 2008

CARACAS, Venezuela (AP) - President Hugo Chavez on Wednesday urged Venezuelans to save money in order to help spare their country from the world's financial troubles.

Wall Street's woes are proof that "capitalism is sinking, and it's going to hit the world hard,'' Chavez said, asking his countrymen to "take every measure'' to avoid the fallout.

"Zero waste'' should be a mantra for government agencies as well as individual Venezuelans, Chavez insisted.

It wasn't clear if his advice signaled a departure from his government's heavy-spending ways, but with 34.5 percent annual inflation in metropolitan Caracas, it seemed doubtful that many Venezuelans would rush to open savings accounts.

Prices are rising at a much faster pace than interest rates, making other investments, including new cars, a more popular place for people to store their money.

Bank deposits grew 29.9 percent in the past 12 months, significantly slower than the 61.8 percent gains seen a year earlier, according to a recent report by the Caracas consulting firm Softline Consultores.

Venezuela's Central Bank has meanwhile been assigned to study the impact that the U.S. financial crisis could have on the country, Finance Minister Ali Rodriguez said in remarks published by the Caracas newspaper El Universal.

Banking authorities are re-examining assets held by the National Development Fund, or Fonden, which had bought about US$300 million in debt through Lehman Brothers, Rodriguez said.

The New York-based financial services firm filed for bankruptcy this week.

"The giants are collapsing,'' Chavez told reporters on Tuesday. Venezuela had "started to unhook'' itself from the U.S. economy in recent years, he said, but "that doesn't mean we're invincible.''

Venezuelan economic growth slowed to a still strong 7.1 percent in the second quarter of 2008, as Chavez used the nation's soaring oil income to continue spending.

In recent years, that cash has funded social programs, nationalizations, and other projects, including arms deals and international aid.

Venezuela's government relies on oil sales to the United States for much of its revenue, but Chavez has said he isn't alarmed by the 34 percent dive crude prices have taken since their July 11 peak.

It is not clear what prices would have to reach in order to seriously affect government spending.

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