Venezuela oil income boosted in ‘08

The price of oil may have plummeted over the latter part of 2008 and Venezuelan oil output may have fallen by nearly 1 million barrels over the past decade. Yet Venezuelan officials claimed that oil income skyrocketed last year.

Officials with Venezuelan state-run oil firm Petroleos de Venezuela (PDVSA) said that oil income grew by 225% over the first nine months last year. Despite the troubles with oil prices in the latter part of 2008, PDVSA saved $10.8 billion of the $12.14 billion profit which will be used to pay for the country’s vast social programs:

President Hugo Chavez's socialist government relies on Venezuela's vast oil reserves for roughly half its federal budget and 94 percent of exports.

PDVSA payments to Chavez's numerous social programs dropped 52 percent to $2.1 billion in the first nine months, the report said. But Caracas-based economist Pavel Gomez said Chavez can fulfill his promise not to slash public aid projects by drawing on other resources.

"The government has money saved in funds that can finance social spending," he said.

In addition, PDVSA officials boasted that Venezuela’s oil reserves will allow the country to be the world’s top oil producer by the end of the year.

Despite the massive oil income, Venezuela’s government is planning an “austere” budget for 2009; one step in that direction was Wednesday’s edict by President Hugo Chavez to slash the foreign currency allotment for Venezuelans traveling abroad.

Image- BBC News
Online Sources- Prensa Latina, Bloomberg, AP, The Telegraph, forbes.com