Venezuela’s 2007 Budget to be 32% Higher than in 2006

Venezuelan Minister of Finance Nelson Merentes (photo) submitted the Chavez government’s 2007 budget plan to the National Assembly on Monday. Spending is set to increase by 32%, making the budget total 115 trillion bolivars or $54 billion.

Merentes boasted that 44.6% of that spending would be for social projects such as cooperatives, housing, salaries, pensions and health & education missions, all of which would be even more ambitious than last year, “This year and next break the cycle of government disinvestment, we're ready to take on more ambitious spending projects,” he said at the National Assembly. He also said funds will be available for mortgage and other types of lending.

The plan is based on forecasts of 5% economic growth, 10% inflation and an exchange rate of 2,150 bolivars to the dollar, which will remain unchanged from the current year, Merentes guaranteed in his speech.

The government currently receives almost half its income from the oil industry and the 2007 budget is based on a price of $29 a barrel of oil. The average price of a barrel of Venezuelan crude oil is $58 for 2006 so far, so the cash available to spend could quite easily exceed the budget plan. This happened last year when 30 trillion bolivars extra spending was available. These year by year spending increases have caused the money supply to grow to five times its size since 2003.
The National Assembly will debate the budget plan next Tuesday, October 22. Subsequently, it will be sent to the Parliamentary Finance Commission where those responsible from the Finance and Energy & Oil Ministries will meet to finalize the plan. Finally, according to the President of the Finance Commission, Rodrigo Cabezas, the plan will be approved by the legislature by December 7 at the latest.