Venezuela Reviewing Economic Situation

Venezuela is reviewing its economic situation daily and may revise its 2009 budget in January or February as oil prices fall amid the global financial crisis, Finance Minister Ali Rodriguez said today in Caracas.

The National Assembly is able to change various elements of the budget before years end, though not the total amount, Rodriguez said.

“For the moment we’re looking at different scenarios for indicators being altered by the crisis,” Rodriguez told reporters after casting his vote in regional elections. “We’re analyzing the situation daily to make decisions that aren’t improvised or premature.”

Venezuela, the largest crude exporter in the Western Hemisphere, estimated an average oil price of $60 a barrel for its 2009 budget and on Nov. 21 the Venezuelan oil basket closed at a three-year low of $40.68. Venezuela depends on oil revenue for half of its public spending and more than 90 percent of its exports.

Volatile oil prices are part of a “normal” cycle following a surge driven by speculation, and lower prices could halt or stall projects from a lack of investment, Rodriguez said.

Rodriguez confirmed that Venezuela repurchased $800 million of government debt recently, including bonds maturing in 2027, without providing further details.

“Normally this type of operation isn’t announced because it stimulates speculative activity,” Rodriguez said.

Author: Jo Amey