Overview
Venezuela’s government is estimating a 27% increase in income from state-run oil company PDVSA next year, as revealed in an unpublished 2024 budget proposal. The relaxation of U.S. sanctions, along with planned presidential elections and stagnant production, have contributed to this positive forecast. President Nicolas Maduro’s administration expects total spending to reach $20.5 billion in 2024, representing a significant 39% increase from the previous year.
Sanctions Relief and Social Spending
Sanctions relief, currently slated to last until April (unless the U.S. reverses its decision), has resulted in increased prices for Venezuelan crude. Analysts predict that this bump in income will lead to higher social spending, as the government seeks to secure support in the upcoming presidential vote, where Maduro is expected to run for re-election. The document suggests that income from oil exports and taxes paid by PDVSA will cover 58% of the government’s total spending, amounting to approximately $11.9 billion. In contrast, PDVSA’s contributions this year stood at $9.34 billion.
Budget Implications
It is essential to note that the increase in PDVSA contributions to the budget does not reflect the full potential rise in the company’s income, as a portion of its earnings is allocated to other funds that lack transparency. Moreover, the budget proposal does not include specific price estimates for crude or production projections for the upcoming year. Reuters reached out to both the communications ministry and PDVSA for comments but received no immediate response.
Sanctions Reevaluation
Although the U.S. eased sanctions in October after Maduro’s government established an agreement regarding presidential elections with the opposition, the Biden administration is considering reinstating them due to the government’s failure to release political prisoners and “wrongfully detained” Americans. It is worth highlighting that Venezuela’s oil income has suffered in the past due to insufficient infrastructure and a lack of investment.