[Economics] Venezuela economy 2010

[Mr.Jhorjan]

 

Link:https://repositorio.cepal.org/bitstream/handle/11362/1074/10/Venezuela_es.pdf

 

VENEZUELA (BOLIVARIAN REPUBLIC OF)
1. General features of recent developments
In 2010 the Venezuelan economy contracted by 1.4%, while its inflation rate was 27.2%.
For 2011, a better level of economic activity is expected in the country and a growth of
real GDP of 2%. It is also expected that the inflation rate will continue to be high, due to the increase
the price of basic products such as food, while employment will continue to stagnate.
2. Economic policy
a) Fiscal policy
  In 2010, the results recorded by the central government were better than in 2009, due to the fact that
the nominal income of the treasury increased more than the expenses. However, according to preliminary figures
Until the third quarter of 2010, the restricted public sector registered a higher deficit than in 2009. In
In 2010, the primary deficit of the central government was 2.3% of GDP, while the overall deficit was
3.8% of GDP (compared to 4% of GDP and 5.4% of GDP in 2009, respectively).
  It is worth noting the drop of 2.3 points of GDP in non-oil revenues of the central government,
while oil revenues increased 0.4 points of GDP. While both capital spending
as current spending decreased as a percentage of GDP, the latter fell more (2.3 points of
GDP), mainly due to reduced transfers to other public bodies. With everything,
increased the central government's fiscal impulse, as nominal spending growth exceeded
increase in income, particularly non-oil income.
  In 2010 the nominal indebtedness of Venezuela (Bolivarian Republic of) increased, but only
slightly, as a percentage of GDP. Total debt went from 18.4% to 18.6% of GDP, increasing by
internal debt by 1.4% of GDP and external debt by 1.2% of GDP. This borrowing was used
to finance the public deficit and obtain funds for different public programs. However, it fits
It should be noted that the official debt figures do not include the debt that the country has contracted with
China, which would be paying with oil.
  As a result of the marked increase in oil prices registered from the fourth
quarter of 2010 and during the first four months of 2011, the oil revenues of the
State. In order to increase the participation of the State in the profits generated by the export of
oil, in April 2011 the government created a "special contribution for extraordinary prices and prices
exorbitant in the international hydrocarbons market", by virtue of which the
exports of liquid hydrocarbons and derivatives. Said instrument establishes that when prices
of oil are higher than the price set in the budget law, but equal to or less than 70
dollars per barrel, a rate of 20% will be applied on the difference between both prices; if the prices
are greater than 70 dollars but less than 90 dollars per barrel, 80% of the surplus will be for the
State; when prices are between 90 and less than 100 dollars per barrel, the percentage of the surplus
for the State it will be 90%, while, if the prices are equal to or greater than 100 dollars, the
State participation in the surplus will be 95%. The resources obtained in this way are channeled towards the
National Development Fund (FONDEN). Through this decree law, the price was also set
maximum for the calculation of royalties, extraction tax and export registration tax 70