Plagued by the protracted underperformance of its oil sector upon which the country’s economy remains heavily dependent, the government of Venezuela has reportedly sent signals that it expects that crude exports will play an improved role in financing the country’s budget in 2022.
A Reuters report of just over a week ago has indicated that the administration of President Nicholas Maduro expects income from the country’s oil exports to finance 61% of its national budget next year.
Not only does the news come against the backdrop of several years of production shortfalls for the country’s state-owned oil company, PDVSA, a circumstance due largely to United States pressures that served to place tough sanctions-related limits on Venezuela’s capacity to both recover and export its oil, but also against uncertainties as to whether US pressure, going forward will not further strangle Venezuela’s oil sales, in effect compromising the country’s earnings from its huge oil sector.
Venezuela’s recent seemingly improved position insofar as its oil production and export capabilities are concerned is the result of the support that has been forthcoming from “global allies” who have helped Caracas increase output this year to the point where it managed sales of 500,000 barrels per day despite Washington’s sustained sanctions.
While in the wake of Joe Biden’s swearing in as US President back in January there had been speculation that the policy of the administration of his predecessor, Donald Trump might have been softened, the failure for such an eventuality to materialise up until now has left Venezuela still dependent on external assistance to ensure levels of oil sales that could adequately respond to the needs of what is known to be an ailing economy. The Biden administration has continued to treat Venezuela, under Maduro’s leadership, as a pariah state and has shown no sign of either easing the existing oil-related sanctions or the various other economic pressures imposed on the Venezuelan economy.
The announcement that the country’s oil sector was set to contribute more meaningfully to Venezuela’s economy next year was accompanied by a statement from the Maduro administration asserting that “the government is developing a series of negotiations that point toward the loosening and then elimination of sanctions. Meanwhile in parallel we continue to work on the reaffirmation of ties and connections with new strategic partners.”
Of a reported total budget of US$13.6 billion, oil income is estimated by official calculations as likely to be around US$8.2 billion and is expected to cover health and education spending and public sector salaries, the Reuters report says.
The Reuters report says that the official revelation was silent on government estimates for economic growth, inflation or the exchange rate for next year, adding that the central bank has not released economic data since the end of 2019.
Difficulties in securing reliable information on the performance of Venezuela’s economy have been attributed to challenges associated with the World Bank receiving credible information from the authorities.
