Venezuela Fiscal


Government presents 2011 draft budget

On 21 October, Finance and Planning Minister Jorge Giordani presented the draft budget for 2011 to the unicameral National Assembly. The document projects expenditures to reach VEF 204.2 billion (USD 47.5 billion based on the non-preferential exchange rate of 4.30 VEF per USD), which represents a 28% nominal increase over this year's budget. The government assumes inflation to range between 23.0% and 25.0% next year and thus estimates expenditures to increase slightly in real terms. However, based on Consensus Forecast panellists' average inflation expectations of 28.8%, the figure would imply a 0.8% contraction in real terms. According to the draft budget, only 27.7% of the income will come from oil revenues, based on the assumption of an average price of USD 40.0 per barrel for the Venezuelan mix of crude oils. The assumed oil price was unchanged over this year's budget, but well below the price of USD 74.32 per barrel observed in October and Consensus Forecast panellists' projections of USD 71.80 per barrel in 2011. Venezuelan authorities tend to underestimate the price of oil, as the surplus revenues obtained when oil prices exceed the assumed price gives more discretionary spending power of the Ch

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