Economy
Regulated expenditures as of December 2008 as well as the recent contributions the Venezuelan oil industry made to the Treasury paved the way, for the time being, for the government to cope with a decline in revenues resulting from falling oil prices. 

According to figures published by the Ministry of Finance, the additional revenues the Treasury received last year amounted to USD 18.37 billion. When financial authorities estimated spending in 2008, they calculated ordinary and extraordinary contributions at USD 63.95 billion, but at the end of the year the contributions exceeded estimations and stood at USD 82.33 billion.

However, such revenues were not spent in full and the government intends to use surplus funds to make some of the payments due in the first quarter of 2009.

The price of the Venezuelan oil basket is currently 37 percent below the value estimated in the 2009 budget, which is USD 60. President Hugo Chávez has stressed that even if the price of the oil barrel fell to USD 0, his revolution will not be defeated. He argues that Venezuela has enough savings to face any crisis.

Chávez is scheduled to deliver on Tuesday 13 his annual address to the National Assembly. The ruler is expected to outline different scenarios to fill the income gap. The members of the economic cabinet have said they are considering a number of scenarios and that the government will take the relevant steps as necessary.

For now, the financial authorities are closely watching crude oil prices this month. Depending on the oil basket price, authorities are to use the Miranda Fund to bridge the income gap. This fund comprises unspent resources as well as extraordinary revenues obtained during the last fiscal year.

In addition to the Miranda Fund, the government plans to cope with reduced income by using revenues from the collection of the value added tax. Under the plan 2 percent of the VAT 9-percent rate taxpayers pay when using credit or debit cards to be transferred immediately to the Treasury. Official sources say that the government is refining this mechanism.

President Chávez has also said that Venezuela can resort to international reserves. The funds deposited at the Central Bank of Venezuela (BCV) amount to USD 42 billion, and a part of these resources has to be transfer to the National Development Fund, also known as Fonden. Under the law governing the Central Bank, anytime international reserves exceed the so-called "suitable level," the bank has an obligation to transfer such surplus to some special funds managed by the government. Even though financial authorities have not set the suitable level of international reserves yet, the Executive Branch estimates that the BCV will have to transfer at least USD 7 billion to such special funds.

Oil dependence
Based on the data provided by the Ministry of Finance, most additional resources in 2008 came from oil revenues. In 2008, oil contributions to the Treasury -including royalties, income tax and dividends- were estimated at USD 24 billion, but at the end of 2008 they totaled USD 38 billion.

The excess USD 14 billion came as a result of the performance of the Venezuelan oil price. Even though prices plummeted in the last quarter of 2008, the Venezuelan oil basket price last year averaged USD 86 per barrel, while the price estimated in 2008 budget was USD 35 per barrel. A part of these petrodollars were deposited in the Fonden.

Translated by Gerardo Cárdenas

Mayela Armas
EL UNIVERSAL