March 18th 2009 (Venezuelanalysis.com)- In response to speculation
in the private media that the decline in oil prices will force Venezuela to
make severe revisions to its national budget this year, Venezuelan President
Hugo Chávez reiterated his administration's commitment to maintain current
levels of social spending and construct a "socialist" economy to overcome the
global economic crisis.
social spending is sacred. We have maintained the level of social spending so
far this year, and we will continue maintaining it," said Chávez during a
meeting of his council of ministers. "I want the whole country to know this,
beyond the speculation, the psychological warfare, and the bourgeois media
Venezuela's 2009 national budget, a total of 83 billion bolivars ($38.6
billion) are allotted to social programs, which amounts to more than 10% of the
estimated GDP, said Chávez. This spending includes the construction of six new
hospitals, which is underway, and the construction of nine more hospitals in
the future, he said.
president's assurance came in response to a recent report in the Venezuelan
daily El Nacional that the Venezuelan economy is headed for a crisis similar to
that of the late 1980s, and that the Chávez administration is preparing severe
budgetary cutbacks of the magnitude of a "classic economic package of the [International
Monetary Fund] IMF."
Tuesday, Chávez said the policies of his government contrast starkly with those
of past Venezuelan presidents and the IMF. "We are constructing a socialist
economy," he said.
explained that the IMF typically recommends de-regulating prices, freezing the
minimum wage, and privatizing state-run sectors of the economy. The Venezuelan
government, in contrast, continues to regulate prices and sanction or
nationalize businesses that do not comply. Also, it increased the minimum wage
last year, and has nationalized or purchased the majority share of strategic
industries such as electricity, cement, oil, telecommunications, and steel.
national budget for this year is based on a $60 barrel of oil, and the price of
oil hovered in the $30 per barrel range over the past month. The government
says its $42 billion in foreign currency reserves and joint development funds
with China and Russia will protect it from this deficit, but it has also taken
steps to cut government costs in ways that do not affect social spending.
oil company PDVSA announced earlier this month that it will cut back its
contracting of services by 40%, and Chávez recently consolidated his cabinet of
ministers. Also, last Sunday Chávez mentioned the possibility of a moderate
increase in the regulated price of gasoline in Venezuela, which is heavily
oil has rallied to its highest price in two months in New York stock markets.
The basket of the Organization of Petroleum Exporting Countries (OPEC), of
which Venezuela is a member, now hovers around $45 per barrel.
of speculations to the contrary, OPEC decided not to carry out a new reduction
in supply earlier this week, saying the 4.2 million barrel per day reduction
OPEC has applied since last October is sufficient.
Energy and Petroleum Minister Rafael Ramírez said Venezuela has complied with
80% of its share of the OPEC supply reductions. He also announced Tuesday that
Venezuela's proven crude oil reserves have increased to 172.3 billion barrels,
ranking Venezuela second only to Saudi Arabia.