Finance Minister Presents 2004 Budget

The 2004 central government budget for Venezuela will include a 30% increase in the minimum salary and the salaries of all public employees. The total expenditures will be 49.9 trillion bolivares, which is about $20 billion at next year’s official exchange rate. About half of the government’s revenue will come from taxes and half from oil revenues, just as in previous years.

Finance Minister Tobias Nóbrega presented next year’s budget to the National Assembly yesterday and said that the budget was calculated under “conservative premises, so as not to generate false expectations.” The budget is based on the calculation that Venezuela’s economy will grow by 6.5% in 2004, of which the oil sector will grow by 16.9% and the non-oil sector by 2.6%.

The oil price used as a basis of the calculation of oil income is $18.5 per barrel, which is relatively low compared to Venezuela’s current oil price, which is currently at $26 per barrel. Average daily oil production for 2004 is estimated at 2.8 million barrels per day. The price of the currency would be pegged at 1,920 bolivars per dollar.

Nóbrega said that the budget for 2004 will be 3.3% lower, in real terms, than the 2003 budget, which reflects the conservative estimates upon which the budget is based. 38% of the total budget is dedicated to social programs. Debt service will constitute 27% of the budget and the budget deficit will reach 2.7% of GNP.

Nóbrega concluded his presentation by saying, “During all of 2002 and the first semester of 2003, the collapse of the public finances was predicted. Today, the credibility of these analysts will fall in the same proportion as the economic perspective of the nation recovers and improves.”