Venezuela: Big rise in social spending in proposed budget

November 4, 2013

Venezuela's finance minister, Nelson Merentes, presented a draft 2014 budget to the National Assembly on October 22 that devotes more revenue to social services, while predicting continued economic growth and lower inflation.

About 62% of the 551 billion bolivars budget (about $92 billion) would be devoted to social services, compared with 37.7% this year.

“Our political orientation is to include those most in need,” National Assembly finance committee member Jose Avila told state broadcaster VTV. “We must address the social sector and ensure access to food, housing, education, health and sport.”

Under the proposed budget, the government would deepen investment in Venezuela's social safety net and promote improved living conditions, Avila said.

He praised the rise in revenue directed towards public services. He said state expenditures under the administrations of forkmer president Hugo Chavez (who governed from 1998 until he passed away in March) played a key role in poverty reduction.

“Extreme poverty was at 20.3% [in 1998], it's now at 7% due to the Bolivarian government's social investment,” Avila stated. “Our economy is at the service of the Venezuelan people.”

The proposed budget is also 39.4% larger than this year's. It estimates GDP growth of 4% for next year, with inflation projected at 26-28%.

However, Merentes said shortages of some consumer products, issues with Venezuela's currency exchange mechanisms, and inflation all pose ongoing risks to the economy. “We have to overcome crisis and advance for the political model of inclusion,” he said.

[Abridged from Venezuela Analysis.]

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