parties next year.

Finance Minister Ali Rodriguez said yesterday that Venezuela's 2009 budget "will have significant restrictions" compared to this year's US$63.9 billion plan, as President Hugo Chavez's government keeps a close watch on slumping international oil prices.

"There are expenses that must be eliminated and others that must be reduced," Rodriguez said in an interview on the privately owned Televen TV Network.

"Many expenses, such as expenses on certain types of vehicles, celluars and parties, will be eliminated."

Flamboyant spending is common within Venezuela's bureaucracy-plagued administration and whisky usually flows freely when state-run institutions throw extravagant parties in December.

Chavez last year criticized political allies who purchased Hummers, saying true socialists must do without such luxuries. He hinted last month at spending cuts, saying that "zero waste" should be a mantra for government agencies.

Bouyed by historically high world oil prices, Chavez has increased public spending in recent years. But fallout from the US financial crisis has caused prices to spiral downward. Venezuela relies on oil income for more than 40 per cent of its budget.

Rodriguez said officials would closely watch the price of oil as they draw up next year's budget, but he noted that "it's something we cannot predict."

Pavel Gomez, an economist at the IESA business school in Caracas said "the financial crisis in the United States and its consequences for the price of oil" have put Venezuela's government officials "on the alert".

Gomez said that plans to curb public spending could be partly aimed at reducing inflation, which is eating away at the government's purchasing power.

Inflation reached 22.5 per cent last year – the highest rate in Latin America – and is on track to finish 2008 at 27 per cent or more.

(AP)