The high price of oil in recent years has allowed Chavez to fund a number of social programmes, such as adult education, agricultural co-operatives and housing schemes, which have been popular with the country's poor. 

Tax rises

The 2009 budget was cut by 6.7 per cent to $72bn and government financing was increased by $16bn from $5.6bn. Sales tax was increased from 12 per cent to nine per cent.

But Chavez also raised the minimum wage by 20 per cent and pledged to cut the pay of senior officials.

He promised to send the revised budget to the legislature, which is dominated by supporters, in the coming days.

Mariana Sanchez, Al Jazeera's correspondent in the capital Caracas, said: "The president is explaining to the people that the world economic crisis has not affected Venezuela directly, but the slump in oil prices has.
"So he announced the 6.7 per cent reduction in the national budget and has asked for the co-operation of all state officials in the implementation of these measures."

Chavez ignored economists who had recommended devaluing the fixed rate curency, a measure that would help cover the budget shortfall but would also further increase inflation.

Faced with highest rate of inflation in Latin America, Chavez has in recent weeks increased pressure on businesses to lower prices by taking over farms and rice mills and threatening to nationalise the country's largest private employer, which makes food and beer.

Port controls

Chavez has also defended his move to take control of all the country's major airports and sea ports, a move that critics say is meant to limit the powers of mayors, governors and other potential rivals.

Troops have been deployed at sea ports and airports across Venezuela [Reuters] 
"Since this morning, we began to reverse the disintegration of national unity," he said on Saturday.

Soldiers were seen occupying facilities under legislation approved by parliament, taking over maritime terminals in the opposition stronghold city of Maracaibo in the state of Zulia, the port of Guanta in Anzoategui and others in the states of Carabobo and Nueva Esparta.

"We are reunifying the motherland, which was in pieces. This is a very important step," Chavez said.

The measure also prohibits states and municipalities from collecting tariffs or tolls at transportation hubs or on highways, cutting off a key source of funding for local projects that could otherwise compete with federal handouts, Abelardo Daza, a Caracas-based economist, said.

Chavez announced the move last week and threatened to arrest opposition governors if they resisted.

Many opponents decried the order as unconstitutional and as an attempt to concentrate all power in Chavez's hands.