Governmental social expenses increase by 30%

The National Executive has managed to raise by 30% the amount of economic resources for activities specifically related to health and education of the population.

This figure- from a study by Ministry of Finance researchers- was reached between 1999 and 2003, in spite of the negative consequences of the coup d’état, headed by the ex- president of Fedecámaras (Federation of Commerce Chambers) Pedro Carmona Estanga, and of the combined oil strike and entrepreneurial lockout later in the same year, led by the former high managerial staff of Pdvsa, the Venezuelan Confederation of Workers, and Fedecámaras.

The figure mentioned above, was calculated comparing economic resources allocated to the public health and education sectors during the 1999-2003 period, with those allocated to the same sectors during ex-president Rafael Caldera’s second tenure. While between 1994 and 1998 social expenses plummeted to 2% of the Gross Domestic Product (goods produced and services provided during a period of time), these expenses have reached nearly 4.5% after 2002.

The report by the Ministry of Finance also reveals that although the oil prices have remained above 30$, variables like external inflation and demographic growth have made these prices relatively lower than those during the last six IV Republic administrations.

In this work titled “The Fable of the Enormous Oil Income” points out that in 1974, the Venezuelan economy received 10.76 billion $ from oil exports, and that external inflation reached an average of 4.94% between that date and 2003, which caused a decrease in the income from the oil business.

The report adds that “in order to keep up the income obtained in 1974, exports should have reached 41.5 billion $ in 2003” instead of the 20.83 billion received, about half of what was received 30 years ago.

Additionally, the document states that “even with the recovery that the prices have had, and assuming that they stay at 30$ per barrel for the rest of the year, in 2004, the Venezuelan economy would receive only 60% of what it received in 1974.”

“And this has happened to an economy in which a population that has grown from 12.3 million to 26 million in three decades must be attended to.”

This analysis also affirms that President Chávez has received, in oil income, amounts significantly lower than those received by the five previous administrations. According to the document, the Bolivarian Government has received 26% of the income of Carlos Andrés Pérez’s first administration; 35% of Luis Herrera Campins’; 56% of Jaime Lusinchi’s; 49% of Carlos Andrés Pérez’s second administration , and 85% of Caldera’s second administration.

The report concludes that in real terms, after making the necessary adjustments to reflect the impact of inflation and population growth, the current administration “has received the lowest average fiscal income since 1974, a condition that has led to the lowest amount of fiscal expenses per capita and thus to the use of non oil income cover such expenses”.

In addition to this phenomenon, the report shows that in 30 years, fiscal contributions from the oil sector dropped almost to one third as they decreased from 21.5% to 8.9% of the GNP. This trend has been much sharper than in the rest of the economic sectors.

“Between the mid 70’s and the late 90’s, there has been a marked diminution in fiscal contributions from the oil industry, among other things, due to a substantial increase in the costs in the oil industry”. That is the reason why this indicator dropped in the following way: from 21.5% in Carlos Andrés Perez’s first government, to 17.9% with Luis Herrera Campins, ;to 11.3% with Lusinchi; to 15.9% in Carlos Andrés Perez’s second government; to 9.3% in Caldera’s second term, and finally to 8,9% with Hugo Chávez.

The study by the Ministry of Finance points out that by 1998, the fiscal contribution from the oil business had dropped to 5.5% of the GNP, “the lowest figure ever reached since there are statistical records in Venezuela”.

The study also states that “from its very beginning, president Chavez’s government, set forth a process to recover fiscal contributions, an endeavor that met strong resistance in the oil industry, and that undoubtedly was one of the factors that unleashed the oil conspiracy of April and December of 2002. Despite the fact that the conspiracy failed, the damages caused by this sabotage on the economy are reflected on the final average fiscal contribution from the oil industry between 1999 and 2003, which closes at around 9%, similar to that of the immediately previous period, although much lower than those received by the governments of Pérez, Herrera, and Lusinchi.”