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Venezuela ECONOMIC POLICY
Fiscal Policy
The government's fiscal accounts generally showed
surpluses
until the mid-1980s because of the immense oil income. In
1986,
however, the drop in oil prices triggered a fiscal deficit
of 4
percent; the deficit exceeded 6 percent in 1988.
The major actors in fiscal policy were Cordiplan, which
was
responsible for long-term economic planning, and the
Budget
Office of the Ministry of Finance, which oversaw
expenditures and
revenues for each fiscal year
(
FY--see Glossary).
Cordiplan also
oversaw the fiscal status of the FIV, PDVSA, the social
security
system, regional and municipal governments, the foreign
exchange
authority, state-owned enterprises, and other autonomous
agencies. But economic planning and budgeting suffered
from a
serious lack of interagency cooperation, and five-year
plans and
annual public-sector investments often lacked
cohesiveness.
Total government spending reached about 23 percent of
GDP in
1988. Current expenditures accounted for 70 percent of
overall
outlays, compared with 30 percent for capital
expenditures.
Capital investments, after a decline in the mid-1980s,
expanded
slowly during the late 1980s. Interest payments,
two-thirds of
which serviced foreign debt, represented 11 percent of
total
expenditures in 1988, a typical figure for most of the
decade.
The revenue structure in the late 1980s remained
excessively
dependent on oil income. In 1988 petroleum revenues, both
income
taxes and royalties, provided 55 percent of total revenue.
Although oil's contribution to total revenue had declined
in the
1980s, most economists felt that it had not declined
sufficiently. Overall, taxes contributed 80 percent of
total
revenue in 1988, with the remaining 20 percent derived
from such
nontax sources as royalties and administrative fees. Tax
exemptions, deductions, allowances, and outright evasion
greatly
reduced the effectiveness of fiscal policy. Officials
planned to
inaugurate a value-added tax in 1990 as another means to
widen
the revenue base.
Data as of December 1990
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