The budget bill, presented to the National Assembly last Thursday, calls for an increase in spending from the 204 billion bolivars ($47.4 billion) calculated for 2011 to nearly 300 billion bolivars ($69.7 billion) for the coming year.
The reason for this increase, the legislation articulates, is to stimulate economic growth through expansionary spending based on the injection of public funds into socio-productive sectors and government programs.
“The budget foresees a series of actions intended to minimize and neutralize the possible negative impacts of the volatile international economic situation including the worsening debt crisis in the Eurozone and a possible growth slow down in the major international economic blocks”, the proposal reads.
Predicting a five percent growth in Venezuela’s GDP for next year, the bill places emphasis on the strengthening of national industries as well as continued investment in the government’s housing, agriculture, and employment programs.
Although the price of Venezuelan crude currently hovers around $100 per barrel, the 2012 budget proposal is calculated on a $50 barrel international price - a precautionary policy intended to protect the economy from any sudden income shifts as a result of a tumultuous international scenario.
“If the financial contributions become superior to those estimated, there will be a continuation in the strategy of using funds to finance socio-productive plans”, the bill states.
Oil revenues are estimated to account for 22.8 percent, or 67.8 billion bolivars [$15.7 billion] of the OPEC member state’s total income in 2012. 55.4 percent will originate from non-oil sectors while internal taxes will make up the remaining 21.8 percent of the budget.
Congressman Jesus Faria, Vice President of the National Assembly’s Development and Finance Commission, pointed out that the 22.8 percent of the nation’s income resulting from hydrocarbon exports is a significant drop from earlier budgets and an indicator of the nation’s growing productive sector.
During an interview on the state television program “Dando y Dando” Faria praised the 2012 proposal for its renewal of the government’s commitment to improving the quality of life for Venezuelan residents.
“It will have a very favourable social impact, maintaining in the long term what has been written in Plan Simon Bolivar 2007-2013...One objective of these policies is to contribute to a reduction in serious social problems such as poverty, malnutrition, and unemployment - areas in which we have had advances”, the lawmaker from the capital Caracas affirmed.
Much of the state’s social spending has been sustained through the government’s National Development Fund (FONDEN), an agency that Faria defended last week in the face of opposition criticisms questioning the body’s integrity.
“Without these funds, the country would have fallen into a deep crisis during the electrical problems of 2010 and the affects of the world economic crisis of 2009... [The opposition] refuses to recognize the enormous advances that have been made in socio-productive areas due to the utilization of these resources”, he said.
Over the past decade, the Venezuelan government has invested more than $400 billion in a vast array of social programs ranging from health care and education to food security and grass roots democracy. In the past three years, annual social investment has averaged $60 billion.
One of the sectors to see a significant increase in funding according to the 2012 budget proposal will be the Ministry of Communication and Transportation.
Roughly 1.8 percent of the entire budget - more than 5 billion bolivars ($1.1 billion) – will be allocated to improving the nation’s highway and railway infrastructure as well as further developing other transportation initiatives around the country.
Much of the investment will take place in road construction and repair including the erection of temporary and permanent bridges as well as emergency escape routes and improving drainage systems to combat problems associated with torrential rains.
Mass transit systems such as the Caracas Metro will also benefit from the new financial plan which stipulates the allocation of 1.1 billion bolivars ($255 million) to subway systems. This includes the expansion of Lines 2 and 5 of the Caracas metro and the construction of a second subway line in the city of Valencia.
In terms of railway development, projects intended to integrate regional territories being carried out by the State Railroad Institute will see an increase in financing while 912 million bolivars ($212 million) will be provided for the maintenance and modernization of the Simon Bolivar International Airport in Maiquetia.
Electricity and Agriculture
As with transportation, a strengthening of the Ministry of Electric Energy will also be an important part of 2012’s budget plan.
More than 7 billion bolivars ($1.6 billion) are being proposed to fortify the nation’s power infrastructure through increased energy generation, distribution and commercialization.
Projects such as the construction of the hydroelectric station Manuel Pia in the state of Bolivar and the installation of power substations in the state of Zulia will benefit from the new budget as will the renovation of parts of Venezuela’s most important power source, the Guri Damn.
Likewise, improving food security and increasing agricultural production will continue to be a priority of the Chavez administration as the Ministry of Land and Agriculture will be the recipient of nearly 3 billion bolivars ($697 million).
Much of this financing will be used to advance the government’s social program Mission AgroVenezuela, founded earlier this year to stimulate production and provide incentives to small farmers to cultivate previously underutilized lands.
The new injection of funds, the budget highlights, will be used primarily to finance agrarian roads, irrigation systems, soil studies, and promote national seed production. Machinery and storage warehouses will also see an increase in funding as will the state’s agrarian lending institutions which provide low-interest loans to thousands of small farmers throughout the country.