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According
to the government’s 2001 budget data, an additional US$ 8.7 billion will
accrue to the account this year, which would bring the balance, net of the
government’s intended use of funds, to US$ 9.2 billion. The
January decision by OPEC to cut production should serve to bolster the oil
price this year. In fact, the price on the Venezuelan mix has
already begun to recover some of the ground lost in December with the
average for this year closing at US$ 22.75 to the barrel on 9 February,
well above the 2001 budgeted US$ 20 price per barrel. Panellists
expect fiscal balances to deteriorate on higher government spending.
As a result, the fiscal deficit is expected to be equivalent to 3.6% of
GDP – still well above the government’s 3.0% of GDP target.
Cabinet
reshuffled. President
Hugo Chavéz Frías reshuffled his cabinet in early February. Key
economic posts remained unaffected by the appointment. Luis
Miquilena, the former Interior Minister, president of the Constitutional
Assembly and president of Chávez’s Movimiento Quinta República (MVR),
was brought in to head the Interior and Justice Ministry. Miquilena
replaces former colonel Luis Alfonso Davila, who was moved to become the
new Foreign Minister. Vincente Rangel was shifted from the Foreign
to the Defence Ministry, the first civilian to hold the post in over forty
years. Defence minister Eliezer Hurtado was moved over to the
Infrastructure Ministry. The cabinet reorganization is an effort by
Chávez to further strengthen the position of his close allies in his
administration. However, the president’s move may serve to further
alienate his administration’s main coalition party the Movimiento al
Socialismo (MAS), which has been increasingly moving towards a more
independent political position from the President, as social unrest mounts
and the President continues to marginalize business through his lack of a
coherent economic agenda. The movement of MAS into the opposition
would erase the government’s two-thirds majority in the Assembly and is
likely to test political stability at the expense important pending
economic legislation.
Note:
The above text is an abridged version of the LatinFocus Consensus Forecast
briefing on Venezuela. For more details please click here.
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