Concern is growing that the government is being too slow off the mark in reacting to the financial crisis sweeping the world and its likely impact on global oil demand and the implications for state revenues next year.
Finance Minister Alí Rodríguez Araque's approach – that it's still too early to decide what's likely to happen, much less act in accordance – has been under question from the start. Critics point out that governments in other countries are already putting measures in place to help alleviate what they evidently deem to be a rainy day.
The suggestion in some economist circles is that the government is reluctant to slam on the breaks – above all, by cutting state spending – in the run-up to the referendum President Hugo Chávez wants to hold early next year in a renewed bid to change the constitution so that he can run for re-election in 2012.
The Finance Minister's cool response does not win plaudits from all observers. "He looks like he's whistling in the dark," said one skeptic. "Maybe he doesn't realize how serious this could turn out. Or if he does, maybe he doesn't know what to do."
Others point out that the government is sitting on large swathes of relatively ready cash which it could use to ride out a short-term crisis. The official reserves stand at $39 billion – and there may be another $25 billion theoretically that could be wheeled out of the National Development Fund (Fonden).
In all, unconfirmed estimates have it that the government could have as much as $90 billion squirreled away around the world. Just how much of this could be made quickly available in a severe crunch remains open to question.
That aside, it's argued that the government should already be using the reserves and Fonden to underpin measures aimed at curbing inflation, most recently estimated at 36.5% a year and expected to rise to 50%in at least the short term.
Primarily, that boils down to state spending cuts and keeping the lid on money supply growth. It also means setting right imbalances in the budget and the national accounts with the exterior, both of which are deemed to be getting out of control. "If action isn't taken, and now, the price to pay will be all the higher later on," an economist warned.
On the other side of the equation, the expectation is that Venezuela will inevitably have to count on less from oil export revenues. With the price of Venezuela's mix of medium grade and heavy crude falling below $40 a barrel (it closed at $39.95 last Friday) it's argued that the government would do well to start now on curbing expenditure and public expectations. "There's not much sign of that yet," the economist said.
Already, the figures don't look right for Rodríguez Araque's 2009 budget, as analysts have been saying all along. Latest estimates are that if oil prices stay at or around $40 a barrel, the minister will only be able to count on much less than $100 billion in oil revenues next year.
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