Economy
The Venezuelan government is keeping its policy of austerity in 2010 and decided to submit to the National Assembly a draft official budget amounting to USD 74.14 billion (VEB 159.4 billion).

This initial expenditure in 2010 shows, in real terms, a 35.7 percent fall compared to the 2009 budget, which amounts to USD 87.44 billion.

According to the 2010 draft budget law, the government plans to rationalize expenditures, stressing that the timing of disbursements will be "consistent with the economic situation and the anti-inflation measures."

Although the Venezuelan Executive Office will contract debt once again to fund the official budget and largely depend on tax income, the fiscal deficit will remain.

Data on spending show that in 2010 Venezuela's fiscal deficit may stand at 4.2 percent of the GDP. Therefore, the 2009 trend would continue next year. In the 2009 draft budget law, the government estimated the difference between revenues and expenditures at 4.9 percent of the GDP this year.

Under the 2010 draft budget law, "the deficit can be attributed to the estimated oil revenues (at USD 18.33 billion) because the government intends to prevent fluctuating revenues from translating into significant changes in the official budget, and to the preservation of social expenses, which are basically funded by increasing the liabilities, and to the fact that 61.2 percent of the debt service will be afforded with new debt."

Temporary management
In the draft budget law, the government stresses the need to rationalize expenditures. However, parliamentary elections will be held during the next fiscal year, and during election years governments tend to heighten public spending.

Analysts claim that even though the draft law provides for reduced expenses, during the next fiscal year the government may actually increase the official budget through the passage of additional loans by the National Assembly.

In this context, noteworthy is the evolution of budget allocations during 2009. Last March, the government cut expenses amidst the decline in oil revenues, and the budget was reduced from USD 77.86 billion to USD 74.37 billion.

When expenses were curbed, the financial authorities said that they would regulate the disbursement of funds and that the priority sectors would be food, housing and electricity.

However, in less than three months, the government discontinued public spending cuts. By the end of June, the allocations exceeded the initial appropriations. During the year, the National Assembly has approved USD 13.16 billion in additional loans. As a result the budget has climbed to USD 87.44 billion.

Translated by Gerardo Cárdenas

Mayela Armas
EL UNIVERSAL