According to analysts, Venezuela’s government is expected to have the opportunity to boost social spending in an effort to attract voters in 2024. This is a result of relief from U.S. sanctions, allowing more oil income to enter government coffers.
In October, the United States temporarily lifted some oil industry sanctions and removed a ban on bond trading as part of an electoral agreement between President Nicolas Maduro’s government and Venezuela’s opposition.
However, the U.S. has tied the extension of this relief to the release of political prisoners and the lifting of public office bans, among other conditions.
It is anticipated that the relaxed sanctions could bring in an additional $1.4 billion in income for Venezuela over the next six months, as stated in a report by analyst firm Sintesis Financiera.
One oil industry source told Reuters that export income is expected to grow by 40% each month as a result of the redirection of exports.
Under previous sanctions, the state-run oil company PDVSA had to sell to Asian markets through intermediaries, impacting government profits.
Jose Vielma, a ruling party lawmaker, stated that the increase in income will go towards social spending and services, while the communications ministry and ruling party PSUV did not provide additional comment on spending plans.
Given the need to improve popular support ahead of elections in 2024, the government is likely to have greater financial flexibility due to the increased income, according to Sintesis Financiera.
Over the last five years, national income has been limited due to the sanctions and issues at PDVSA, resulting in restricted social spending and public sector salaries.
Consulting firm Ecoanalitica projected that if the sanctions relaxations continue and oil production increases, the additional income could reach $7 billion in 2024.
Venezuelan political consultant Oswaldo Ramirez highlighted the possibility of workers receiving bonuses and improvements in the distribution of food during electoral periods.
He also mentioned that the government has introduced new social programs for young people and women for the first time since 2017, distributing various goods and housing.
However, opposition figures have criticized these programs, stating that they are an inadequate response to the economic crisis and arguing for higher public sector salaries and pensions.
Former opposition lawmaker Jose Guerra stated that public sector raises may still be too costly, and the government is not expected to spend at previous levels.
More income may also allow Maduro to address inflation with higher spending and increased availability of credit, as public spending has declined significantly in recent years.
Economic analysts revealed that public workers’ wages have decreased, leading to protests for higher salaries. Some 2 million public workers earn between $45 and $60 per month, significantly less than private sector wages.
If there is higher oil income, analysts estimate that prices could fall, potentially reducing inflation to 250% year-on-year.
(Reporting by Mayela Armas and Deisy Buitrago; Writing by Julia Symmes Cobb; Editing by Rosalba O’Brien)
