Eric Watkins
OGJ Oil Diplomacy Editor
LOS ANGELES, Mar. 30 -- Venezuelan Finance Minister Ali Rodriguez Araque said the drop in world oil prices will cause budget revenues of his country to be reformulated, as well as changes in economic growth estimates, which are now 1-2%.
In an interview with Caracas's El Universal newspaper, Rodriguez—a former minister of oil for Venezuela—said the country's projected revenues have been adjusted to 156.38 billion bolivares ($72.8 billion) due to the drop in oil prices to $40/bbl from $60/bbl.
Rodriguez said the main variable in planning now "is the scenario of global crisis and the effects it might have on the oil market." But he offered reassurances, saying that "Venezuela, thanks to its much-maligned exchange controls, has a sort of wall that the strong waves of this global tsunami have crashed against."
With the exception of the Stanford fraud case, he said, "depositors here have not suffered the slightest anxiety over the losing their savings;" He said, "the Venezuelan financial sector is very solid."
For the most part, Rodriguez supports efforts by the Organization of Petroleum Exporting Countries to shore up oil prices by reducing production. "So far the measures that OPEC has taken have managed to stop the drop in oil prices, but there is still no indication of a recovery, and it is still too soon to know how much the oil sector might be affected by a drop in demand," he said.
"There might be further drops in oil prices if the global recession gets even worse and that would be the variant that could lead us to think of any other [governmental] measure" to take, he told the paper.
As for the oil price necessary for the government to meet expenses, Rodriguez said, "We have already implemented a cut to $40/bbl, and we need to maintain a minimum of $40 for the Venezuelan basket. For the moment we would like to reach an average of $60 for the year, but it all depends on how things go."
The price of Venezuela's gasoline, which is scheduled to rise, was a sore point with the minister. "Over here we are paying for people to consume gasoline, which is a brutal waste," he said. "Those prices do not cover the cost of extraction, transportation, refining, and the distribution of the gasoline in gas stations."
Continuing about gasoline, Rodriguez said that Venezuela's "domestic market is already 650,000 bbl, which is brutal, and it goes without saying that an adjustment will have to be made, but it will have to be made at the right time."
Contact Eric Watkins at [email protected].