Venezuelan government expands funding sources

President Hugo Chávez does not pressurize only state-run oil holding Petróleos de Venezuela (Pdvsa) and Venezuela's Internal Revenue Service (Seniat) to secure additional revenues. Public banks and state-run companies also have to render extra funds. All these funds are set to cover the expanding public spending.

In a ministerial council held last Wednesday, February 15, the Head of State displayed a wide array of funding sources. In his speech, he claimed to have "a little book" he hands over to Finance Minister Jorge Giordani. He explained that the record contains funds availability and a breakdown of the balances of the Socialist Efficiency Fund, a facility aimed at administering the earnings of public companies.

The fund manages the financial resources transferred by the Banco de Venezuela and the Treasury, as well as dairy producer Lácteos Los Andes, Diana industries, port administrator Bolivariana de Puertos, the Socialist Fund for Agrarian Development, Corpozulia, Café Venezuela, tour operator Venetur, Maiquetía airport and Socialist Arepa Makers.

The Head of State underscored that Banco de Venezuela and the Treasury would deposit in the financing facility USD 441.7 billion on account of the earnings of November-December 2011 and January 2012.

In the face of the results of state financial institutions, he advised that the rest of government agencies should be more efficient and encouraged Guayana basic industries to hand over their dividends to the government.

The outlay leap

In 2011, the National Executive resumed the policy of expansive public spending. In 2012, it stepped on the gas; only in January, disbursements from the Treasury amounted to USD 6.6 billion versus USD 3.6 billion in the same period last year, mirroring a 41.7%-hike in real terms.

Such a behavior shows that Chávez's Administration will spend funds both by ordinary and extraordinary means.

Since 2005, the government manages two facilities. In addition to the regular budget, it counts on a parallel provision composed of the National Development Fund (Fonden), the Chinese Fund and the funds managed by the Office of the National Treasury and Pdvsa. And under these schemes, transfers are on the rise.

The oil holding is the one with the heaviest onus; in addition to payment of ordinary taxes and contributions to the parallel spending, it should shoulder social welfare programs, take care of labor liabilities and meet the requirements of basic companies.

Translated by Conchita Delgado