High on the list of countries hit hardest by the plummeting global price of oil is Venezuela. With its own oil selling near $61/barrel, a figure that can only cover half of the government’s budget by some accounts, Venezuelan President Nicolas Maduro announced earlier this week that he has cut his budget’s “unproductive expenses” by 20%. What Maduro precisely meant by that is unclear, but analysts are noting that Venezuela has started cutting back on its subsidized oil export program to several Latin American countries. The Wall Street Journal:
Even as Venezuela pledges to continue the program, the country’s oil exports to the countries fell about 20% through October compared with the same period last year, says ClipperData LLC, a New York data tracker. And last year, Venezuela’s cut-rate oil exports declined 15% from 2012, the International Monetary Fund says.Several participants in the program, called Petrocaribe, are preparing for further declines, which diplomats said stand to upend spending plans and tip some economies into recession.
Petrocaribe was costly to Venezuela even in good times, but its largesse bought it regional clout, as well as cover in international institutions such as the UN. If oil prices remain at current levels or sink lower, we’re likely to see Venezuela’s fortunes decline further on the international stage, even as it faces a more volatile political situation at home.