By Deisy Buitrago
CARACAS (Reuters) - Venezuelan President Hugo Chavez will seek Congress' approval to hike the 2012 government borrowing cap by about a third to $27 billion to help fund a new pension program ahead of his October 7 reelection bid.
His administration and Venezuela's state oil company PDVSA issued $17.5 billion in dollar-denominated bonds last year - the most by a Latin American government and its respective state oil company. This year the OPEC nation has relied almost entirely on the local debt market for financing.
Vice President Elias Jaua said late on Tuesday the funds would primarily be used to pay pensions under the "Love for the Elderly" pension program that Chavez launched last year, and to pay off other debts to public sector workers.
He told reporters the Cabinet had approved the "special law for complementary indebtedness" and the president would send it within hours to the National Assembly, the unicameral legislature where Chavez's Socialist Party has a majority.
It was not clear whether the extra borrowing would involve tapping the international market.
Launched last December, the new pension program provides pensions equivalent to minimum wage, or around $360 a month. As of last February, nearly 1 million people had registered, some of them who had been deprived of their social security payments due to employers who stole their social security contributions.
Venezuela's legislature has so far approved borrowing of almost 87 billion bolivars, or about $20 billion, this year. So Chavez's proposal to increase that by an additional 30 billion bolivars - nearly $7 billion - represents an increase of around a third.
The former soldier has launched a wave of social spending ranging from home construction to stipends for poor mothers to shore up support ahead of the upcoming vote, which is seen as his tightest race yet.
Wall Street analysts had expected Venezuela to issue as much as $15 billion in global bonds this year, but have since lowered those estimates. In May, PDVSA issued $3 billion in notes in a private offering with the central bank and state-run banks.
Chavez put in place a law last year that let Venezuela double its total borrowing, using special decree powers granted by Congress in 2010. He needs congressional approval for the change this year because his decree powers have lapsed.
(Writing by Brian Ellsworth; Editing by Daniel Wallis and W Simon)