Venezuela’s 2016 Budget Guarantees Social Investment despite Economic War

October 29, 2015

venezVenezuelan Vice President for Economic Area, Rodolfo Marco Torres stressed Tuesday that the drafted budget of the nation 2016 has been estimated at 1,5 trillion bolivares (Bs.), which reaffirms the commitment of the Bolivarian government to maintain social investment levels high, as a vehicle to continue improving the quality of life of Venezuelans.

During the budget presentation at the National Assembly’s standing committee on finance and economic development, Marco Torres said that despite the destabilizing strategy of the right –consisting of speculation, hoarding and smuggling of food and other goods– the Executive increased by 108% the budget’s amount for 2016 compared to 2015, in order to ensure social investment for salary payments, pensions, and promote the different social programs and missions.

The Minister of Finance said that this proposal, passed in a first discussion in parliament, is consistent with the model of fair distribution of wealth that has characterized the Bolivarian Revolution.

60% of the budget tabled in parliament is intended for public investment, with 42% for social investment in areas such as housing, sports and culture; 14% for education and 7% for health.

The proposal of government’s revenues and expenses for next year is based on prudence and economic rationality, given 50% decline of oil prices in the international market since mid-2014.

Thus, the government calculated average price of the Venezuelan barrel at $ 40, inflation at 60% and an exchange rate of 6.30 bolivars per dollar.

Measures to protect the people

Marco Torres emphasized that the purpose of the executive is to defeat economic war led by sectors of national and international right against the Venezuelan people, in order to destabilize the country and stop the progress of the Bolivarian Revolution.

In this regard, he spoke about the implementation of a series of measures to reduce the levels of induced inflation and protect the income of Venezuelan families from speculators.

He addressed the reform in the Fair Price and Cost Law to establish two pricing categories: maximum retail price and fair price, of services, products and goods sold in the country. This reform joins “the support for the productive sector, support for the working class, the 30% increase announced by President Nicolas Maduro and the release of currency for strategic sectors and projects for the country.”

“Despite the decline of oil prices, we are ensuring that currencies go directly to social investment and productive projects. We are also increasing non-oil exports levels to enhance revenue collection along with the implementation of Plan Guayana Socialista (Socialist Guayana Plan) to diversify the economy, a policy of import substitution and stimulus to produce what we grow,” the minister told the Finance Committee.

Tax Optimization

From the total amount of 1,5 trillion bolivars budgeted by government, 1,2 trillion bolivars will be provided by the collection of internal revenue, while 216 billion will come from the sale of oil in the international market.

In the calculation of the financial instrument it is expected that 77.5% of the proceeds from tax collection –amounting to an estimated 935 billion bolivars– will be raised by the National Customs and Tax Administration Service (SENIAT), due to the successful management of this agency.

In this regard, the Minister of Economy and Finance said that the government will continue the program to optimize tax collection processes.

He also addressed the impact of the reform of the Law on Income Tax, which included the elimination of inflationary adjustments for taxpayers engaged in banking, financial, insurance and reinsurance activities, thus producing tax evasion; and the 15% increase of tax rate applicable to luxury goods such as yachts, planes and mansions.

In his speech, Marco Torres also drew attention to the management practices and policies implemented by the Bolivarian Government to promote better handling of debt levels.

Thus, the draft Annual Indebtedness Law for fiscal year 2016 amounts to a total of 195.213 million bolivars.

On the issue, the head of the economic area highlighted the changes of the Venezuelan debt, that by 1989 10% was made up by domestic debt and 90% of external debt, while at the end of 2014 those figures changed to 68% of domestic debt and 32% from foreign debt.

Payment of commitments

Marco Torres said that Venezuela will continue fulfilling timely its commitments of domestic and international debt to protect the people.

He reported that during the course of 2015 the total payment of principal and interest on bonds was 13 billion dollars, and that the country has the resources to pay sovereign bonds, such as the Petrobono 2015 of state oil company PDVSA, with an amount of $ 1,4 billion in capital and $ 35.3 million in interest.

He said that this demonstrates the strength and reliability of the Venezuelan state, “despite the onslaught of rating agencies joining the economic war promoted by business sectors of the country linked to rightwing political parties, in order to limit the country’s access to international credit.”

Source: Venezuelan News Agency