Caracas: Venezuela’s government is planning a $22.7 billion budget for 2025, marking an 11% increase over this year’s $20.5 billion, Vice President Delcy Rodriguez announced to lawmakers at the government-friendly National Assembly on Tuesday.
“2025 will be a better year because we have learned to manage the difficulties,” Rodriguez stated during the assembly meeting.
Falling Oil Revenue and New Sources of Financing
Despite the increase in overall spending, contributions from state-run oil company PDVSA are expected to decrease by 14.6% next year, according to a copy of the budget bill reviewed by Reuters. PDVSA’s contributions, including taxes and sales, are projected to cover 53% of the government’s spending needs, or approximately $10.1 billion based on the exchange rate calculated by Venezuela’s central bank.
In 2024, PDVSA was expected to contribute $11.9 billion, a significant drop in anticipated revenues for 2025. PDVSA has not yet responded to a request for comment on its projected contribution.
The Venezuelan government also expects to raise $5.25 billion from tax revenues, covering 28% of the budget. Additional financing will come from mining, loans, and debt issuances. The budget document did not include any details on expected economic growth or inflation forecasts.
Economic Policies Amid Hyperinflation and Sanctions
Venezuela has faced years of economic turmoil, with hyperinflation and extensive U.S. sanctions hampering growth. In 2022, President Nicolas Maduro’s administration shifted to more orthodox economic policies, including credit restrictions, lower public spending, a fixed dollar-bolivar exchange rate, and central bank sales of foreign currency to manage consumer prices.
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Maduro, who begins his third term in January after a controversial election, has claimed that his government defeated inflation, which had skyrocketed to more than 100,000%. He also stated that prices in 2024 are similar to those in 2014.
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However, following the government’s decision in mid-October to allow the bolivar currency to float, the national currency has experienced a sharp depreciation, with the bolivar now valued at about 45 to the U.S. dollar, according to central bank data. Prices have surged again in the final quarter of 2024 as the bolivar weakens.
