Venezuela's deficit down almost 50% upon devaluation

The Venezuelan currency devaluation announced on February 8 partly fills the country's fiscal gap. Upon the 46.5% devaluation, the central Government has cut the fiscal deficit by almost 50%. The remaining deficit may lead to further debts, though.

Upon devaluation, Information and Communication Minister Ernesto Villegas posted on his Twitter account that the Government's deficit slipped from 5.5% to 3.3% of the gross domestic product, thus dropping 2.2 points.

Although authorities have provided very few details about the Government's financial performance, only now they conceded that the gap between income and expenses widened in 2012.

Even though the Venezuelan oil price exceeded the USD 100 ceiling public debt soared, spending skyrocketed amid presidential and gubernatorial elections in 2012.

Despite the current gap, there are no signals that public spending would be cut. In January 2013, the Government increased expenditure by 67% over the previous year.

Think tank Ecoanalítica asserted that the forex rate adjustment from VEB 4.30 to VEB 6.30 per US dollar would yield more bolivars per petrodollars. Based on the firm's estimates, the Government will receive additional USD 13.4 billion this year.

marmas@eluniversal.com

Translated by Jhean Cabrera