The Venezuelan government is pondering the possibility to review the execution of public expenses to avoid pressuring liquidity up, but the regional election to be held next November is likely to result in increased expenses this year.
 
A report prepared by Banco Mercantil shows that the vote scheduled for the second half may involve fiscal obligations exceeding those in 2007. The Venezuelan government expenses are therefore estimated at USD 90.9 billion, a 40 percent increase compared to USD 63 billion in 2006.

However, expenses are expected to be higher, considering the quasi-fiscal or parallel expenses to be incurred through the oil industry's and the National Development Fund's trusts. Including these two other mechanisms, total expenses are likely to amount to USD 105 billion.

The bank added that in 2008, public expenses "would be the highest ever since 1977, and would be only 7.1 percent lower than the historic high recorded in 1974."

The report calculates government revenues at USD 89.7 billion, including oil revenues at USD 37.1 billion and non-oil revenues at USD 52.6 billion. The figure does not include the expenses to be incurred by special funds.

Considering revenues and expenses, the report estimates a 0.3 percent deficit of Gross Domestic Product in 2008.

Based on debt amortizations, gross funding needs are likely to climb USD 5 billion, and such needs might be met with issues of debt bonds and Treasury bills.