December 13, 2005
Venezuela approves 2006 budget with 5 pct growth

(Reuters) - "Venezuela's National Assembly on gave final approval to the government's 2006 budget proposal that estimates the country's oil-heavy economy should grow 5 percent next year.

The 2006 budget plan earmarks some $40.5 billion in expenditure, 41 percent of that for social projects such as healthcare and education. President Hugo Chávez, who is yet to sign the bill into law, has been pouring billions in oil revenues into projects for the poor in Venezuela .

The budget is based on an average price of $26 per barrel for Venezuela 's basket of crude and products and forecasts the world's No. 5 oil exporter will produce an average of 3.4 million barrels per day (bpd) of petroleum.

The oil price estimate is modest given a recent rally in world crude prices, even though Venezuela 's heavy crudes are cheaper than the world's more common types. The price of a barrel of the country's basket has averaged $45.2 this year.

The 2006 budget foresees the same foreign exchange rate as now, of 2,150 bolivars to the dollar. Venezuela uses a fixed foreign exchange rate system.

The budget envisages a 6 percent expansion in the oil sector, while the nonoil sector is expected to grow 5 percent.

Chávez's government estimates economic growth of up to 10 percent in 2005 as rising oil prices keep propelling Venezuela out of the recession it suffered in 2002 and 2003. The economy grew nearly 18 percent in 2004.

Inflation is expected to be around 10 percent in 2006. Venezuela has recently made headway in curbing inflation. The rise in consumer prices slowed to 15.3 percent in the 12-month period through November from 19.5 percent for the same period last year".