Caracas, October 20, 2004—Venezuela’s Finance Minister, Tobias Nobrega, presented the 2005 state budget to the National Assembly yesterday, which specifies that social spending will constitute 40.5.% of the overall budget – an increase of 3% with respect to 2004. Also, the spending represents a four point increase of social spending’s percentage of GDP.
The budget foresees the building of 700 new “Bolivarian” schools, 200 “Mercal” stores in which subsidized food is sold in the barrios, 400,000 new students for the “Mission Sucre” that provides scholarships to university students, 80,000 subsidies for students in “Mision Ribas” that provides high school completion education, and the expansion of the “Barrio Adentro” health clinics in the barrios. Other projects include increased funding for the construction of public housing and rail transport expansion.
The 2005 budget is based on an estimated price of oil at $23 per barrel, which is about $20 below what Venezuelan crude is currently trading at. Also, inflation is estimated to be at about 15% for 2005 and growth at 5%. For 2004 growth has been estimated at 11% and inflation at 17%.
Nobrega explained that despite the increased budget, “2005 must be the year of savings.” This is why the estimated price of oil was kept deliberately low, so that any additional income from a higher price would go directly towards paying off Venezuela’s debt. Also, it is estimated that there will be a 3.2% budget surplus, which will also go towards paying off the debt. The repayment of internal and external debt in 2005 will amount to 21.6% of the total budget, which is higher than the entire education budget.The finance expert of the opposition, Elias Matta, of the party La Causa R, criticized the budget, saying that it is actually based on a price of oil of around $30 per barrel. Also, it does not take into consideration the eventual passage of a new social security law, which is long overdue and which would need considerable funding. This, according to Matta, means that the government is not considering the passage of this law. Nonetheless, Matta praised that the budget would pay off some of the internal debt.