Caracas Chronicles

It must be difficult being a macroeconomic analyst in Venezuela.

Case in point: the country’s budget. We all know the government spends via the official budget, which gets approved via the legislative process, with all the trappings of a pseudo-democracy.

But then, we also know the government spends money outside of the budget via the BUDGET. How much money? Nobody really knows. There is zero accountability, and very little of it is shared with state and local governments, as the Constitution mandates. That is the cash register they get their funds off of to buy things like … judges, patronage, elections, and the sort.

The government just presented its total “budget” (i.e. the official one) for next year. It is for BsF 742 billion, and in the words of Finance Minister Rodolfo Marco Torres, it “ensures the nation’s economic and social balances.”

So … how much is that? Well, at the market exchange rate, it is roughly US$7 billion.

To put the figure in context,

• it is roughly half of the gasoline subsidy;
• if we estimate the government sells 1.5 million barrels of oil per day at an average price of US$80 per barrel, it is the equivalent of 58 days of exports;
• it is roughly 5% of what the government actually spent in 2013 (around $139 billion, according to the CIA Factbook).

Now, you may actually say that the budget is much more than that, because one should use the official exchange rate. If you believe that, then you’re probably one of those hopeless people that think Venezuela’s minimum wage is the highest in the continent.

You know what? Here at Caracas Chronicles we wish we could take these folks seriously, we really do. But when the government claims that it will spend on the total budget (i.e., including state and local governments, defense, education, health ministries, foreign relations, etc.) an amount that is this paltry, when the naked manipulation of economic figures reaches such farcical heights, when the government is basically announcing that it will shuffle away practically all public spending from public view in order to win an election … it becomes practically impossible.

Budgets matter. Budgets are the mechanisms through which governments set out their priorities and policies, and through which civil society can keep a check on what they are doing with the people’s money.

Budgets matter. We just wish we had one.

(HT: Moncho, as well as the rest of the CC gang)