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03-06-2007, 10:57 PM
Amidst skyrocketing oil prices, from USD 46.03 in 2005 to USD 56.44 in 2006, President Hugo Chávez Government' wallet has swollen significantly, but expenses have leapt so high that Venezuela cannot balance the books and needs to resort to lending.
Based on a report published by the Central Bank of Venezuela (BCV), ending November 2006, Venezuelan ordinary revenues -excluding additional loans- were USD 44.8 billion, while ordinary expenses -excluding debt amortization- totaled USD 48.7 billion. Therefore, there was a deficit of USD 3.9 billion, or some three points of Gross Domestic Product.
While such a gap was bridged easily, experts have voiced concern that the deficit is a clear indication that the Venezuelan Government needs oil prices to remain high, in order to avoid fiscal adjustments.
According to research firm Ecoanalítica, the ratio of public expenses Venezuela needs to fund with oil revenues jumped from 10.1 points of GDP in 1999 to 26.3 points in 2006. While Venezuelan oil basket price ended at USD 52.79 in March 2nd, the average price so far this year has decreased by USD 7.76 compared to 2006.
Venezuelan Government' revenues are USD 1 billion down every time the Venezuelan oil basket drops USD 1.
Under the Venezuelan public budget the National Assembly endorsed for 2007, oil prices are estimated at USD 29. However, over the last few years, Chávez' administration has overwhelmingly surpassed estimated public expenses. Consequently, Venezuela needs crude oil prices higher than estimations.
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The reason behind such unbalance is the fact that public expenses have soared steadily, jumping from 21 percent of GDP in 2000 to 34.1 percent last year. Meanwhile, in real terms and in per capita terms, oil sales are quite below the levels recorded during the first administration of President Carlos Andrés Pérez (1974-1979) and under President Luis Herrera Campíns (1979-1984).
Chávez' administration has transferred USD 18.3 billion to the National Development Fund (Fonden) -a development fund that could be used to offset the impact of a likely drop in oil prices. However, from such amount, USD 16.6 billion has been earmarked for diverse projects.
Venezuelan fiscal policies are running counter to the region. According to the Economic Commission for Latin America and the Caribbean (ECLAC), in 2006 "public expenses heightened as a result of increased investment in infrastructure works. However, as fiscal revenues have grown significantly, a growing primary surplus prevails among the governments" of 2.1 percent of GDP in average in the 19 countries.
Venezuelan Minister of Finance, Rodrigo Cabezas, has said the government has no plans to cut expenses in 2007.
http://english.eluniversal.com/2007/03/06/en_eco_art_06A841895.shtml
Based on a report published by the Central Bank of Venezuela (BCV), ending November 2006, Venezuelan ordinary revenues -excluding additional loans- were USD 44.8 billion, while ordinary expenses -excluding debt amortization- totaled USD 48.7 billion. Therefore, there was a deficit of USD 3.9 billion, or some three points of Gross Domestic Product.
While such a gap was bridged easily, experts have voiced concern that the deficit is a clear indication that the Venezuelan Government needs oil prices to remain high, in order to avoid fiscal adjustments.
According to research firm Ecoanalítica, the ratio of public expenses Venezuela needs to fund with oil revenues jumped from 10.1 points of GDP in 1999 to 26.3 points in 2006. While Venezuelan oil basket price ended at USD 52.79 in March 2nd, the average price so far this year has decreased by USD 7.76 compared to 2006.
Venezuelan Government' revenues are USD 1 billion down every time the Venezuelan oil basket drops USD 1.
Under the Venezuelan public budget the National Assembly endorsed for 2007, oil prices are estimated at USD 29. However, over the last few years, Chávez' administration has overwhelmingly surpassed estimated public expenses. Consequently, Venezuela needs crude oil prices higher than estimations.
[...]
The reason behind such unbalance is the fact that public expenses have soared steadily, jumping from 21 percent of GDP in 2000 to 34.1 percent last year. Meanwhile, in real terms and in per capita terms, oil sales are quite below the levels recorded during the first administration of President Carlos Andrés Pérez (1974-1979) and under President Luis Herrera Campíns (1979-1984).
Chávez' administration has transferred USD 18.3 billion to the National Development Fund (Fonden) -a development fund that could be used to offset the impact of a likely drop in oil prices. However, from such amount, USD 16.6 billion has been earmarked for diverse projects.
Venezuelan fiscal policies are running counter to the region. According to the Economic Commission for Latin America and the Caribbean (ECLAC), in 2006 "public expenses heightened as a result of increased investment in infrastructure works. However, as fiscal revenues have grown significantly, a growing primary surplus prevails among the governments" of 2.1 percent of GDP in average in the 19 countries.
Venezuelan Minister of Finance, Rodrigo Cabezas, has said the government has no plans to cut expenses in 2007.
http://english.eluniversal.com/2007/03/06/en_eco_art_06A841895.shtml