The sulfur Hugo Chavez said he was smelling recently was most likely coming from the burn rate of his country’s prodigious spending, which is outpacing even the vast oil reserves of Venezuela. From the Wall Street Journal (subscription required for full story):
Venezuela Has Deficit As Chávez’s Spending Outpaces Oil Gains
By RAUL GALLEGOS
October 10, 2006; Page A6
CARACAS, Venezuela — Venezuelan President Hugo Chávez’s spending has exceeded his government’s gains from oil sales this year, resulting in a deficit that many believe will grow in coming months. The Andean country’s accumulated deficit stood at 4.9 trillion bolivars ($2.28 billion) at the end of July, according to the latest central-bank figures.
Venezuela’s oil industry accounts for about one-third of gross domestic product and one-half of government revenue. “We expect to see a deficit of $7.7 billion this year,” or 4.3% of gross domestic product, said Andreas Faust, an economist at Banco Mercantil in Caracas.
Mr. Chávez has continued to fund popular social programs that include free health care, education and subsidized food, as he seeks another six-year term in office in December elections. He has raised salaries of state workers, continues to fund state enterprises and gives soft loans to favored industries. Many analysts expect total spending to surpass 120 trillion bolivars or almost 40% of GDP by year’s end.
State spending has pushed up prices for goods and services, resulting in 12.5% inflation as of September.
Maybe Chávez is racing his North Korean friend with the mushroom-cloud hair to see who can run their country into the ground first.