Mérida, October 20, 2007 (venezuelanalysis.com)-
Venezuela's Minister of Finance Rodrigo Cabezas, presenting the national fiscal
budget for 2008 to the Venezuelan National Assembly, announced increased
government spending for 2008 including more money for social programs and
increased income from non-oil sectors. Also, according to Cabezas, 2008 will be
the fifth consecutive year of economic growth for the country.
During a presentation to the National Assembly on Thursday, Cabezas stated that
the budget for 2008 would permit the country to make new gains in education,
quality of life, health care, and national development. The total budget for
2008 shows an increase of 19 percent from the year before, for a total of Bs.
137 trillion (US$ 63.9 billion), and predicts 6 percent growth for the year.
"We are saying that 2008 will be the fifth consecutive year of economic
growth," stated Cabezas.
Social spending will be significantly increased for 2008, to 46 percent of the
national budget, up from 41 percent in 2007. This includes an increase in the
funding of the social missions of the Chavez government, which will receive a
total of Bs. 5.5 trillion (US$ 2.5 billion), an increase of nearly 62 percent
from the 2007 level. These social missions include the national health program
Barrio Adentro and the literacy and education programs Robinson, Rivas, Che, and
"The 2008 budget is a budget for economic growth. It is a budget for
social inclusion," Cabezas said.
He stressed that Venezuela
is spending a greater percentage on education than any other country in Latin America. For 2008, nearly 22 percent of the
national budget will be directed toward primary and secondary level education,
compared to 9 percent in 1998.
As usual, the Chavez government based the national budget on a conservative oil
price, although it was raised to $35 per barrel for the 2008 budget up six
dollars from the budgeted amount for 2007. The Chavez government expects oil
prices to remain high due to the increased demand from Asian countries such as China and India.
The minister said that he expects total oil income for 2008 to be around Bs. 52
trillion (US$ 24 billion), but emphasized that non-oil income is playing an
ever larger role in state revenues. For 2008, oil income is expected to make up
37.6 percent of state revenue, while non-oil income at Bs. 75.9 trillion (US$
35 billion) will make up 51 percent. Cabezas emphasized that this was a
significant change in the Venezuelan economy since Chavez came to power.
"In 1997 oil income made up 56 percent of the budget. Today it makes up 41
percent. Likewise, ten years ago non-oil income made up between 37 and 45
percent. In this budget that we are presenting today it represents 51
percent," he said.
The increased share of non-oil income is due to the increased efforts by the
Chavez government to enforce tax laws, but Cabezas stressed that the government
is striving for a more progressive tax system.
"Ideal would be for taxes on direct consumption to disappear so we can
concentrate on income taxes and taxes on profits," he said.
Cabezas added that the budget allows for a continued service of the debt. The
minister said that current debt is at 21.34 percent of GDP, but for 2008 it is
expected to drop to 19.6 percent. External debt will be dropped to 12.7
percent, down from 25 percent in 1998. Cabezas said that this level of debt is
The minister assured that there would be no devaluation of the currency in
2008, and estimated inflation to be around 11 percent for the year.
Unemployment was estimated to be 7 percent, but he said that according to their
calculations it could be even lower.