Wednesday, March 15, 2006

Venezuelan economic notes 

Venezuela is considering upping the taxes paid by the foreign firms operatin in the Faja del Orinoco from 34% to 50%. It is considering a similiar tax increase for firms exploiting natural gas. The companies effected would be Total of France, Statoil of Norway, British Petroleum, and Chevron, ConocoPhilips, and Exxon Mobil, all of the U.S.

Seperately Total has agree to pay back taxes of up to $107 million this week. Venezuela threatened to close their operations if the back taxes were not paid this week.

All this is occuring after the government had already assessed higher taxes and royalties on oil companies operating in Venezuela. Further, it forced to 32 oil companies to change their operating arrangements in such a way that more of their profits would accrue to Venezuela. So Venezuelas oil revenues will continue to climb not just as oil prices themselves climb but also from the Venezuelan government getting a larger share of revenues those sales generate. So 2006 seems almost certain to see Venezuela get billions of dollars more in oil revenue than it got in 2005


Ememployment fell in February 2.2% from January. Year over year (comparing February 2006 to February 2005) it fell 3.4%. Of the 5,836,466 people who are considered "employed" 54.7% work in the formal sector while 45.3% are in the informal sector.


The government declared a housing "emergency". Venezuela has a housing "deficit" of almost 2 million units and the deficit has been going up as not enough new housing has been built to keep up with population increase. The emergency decree is meant to bring more funds into the housing sector and expadite construction which has been very slow under the current government.

The government is dedicating a billion dollars for housing construction in the Caracas area alone. Presumabely they are going to build 17,000 units in areas such as Montalban, La Urbina, El Conde, and Las Acacias. Doing some arithetic this comes to a cost of $58,000 per unit. That seems very expensive, especially when compared to these houses that only cost a little of $20,000. Further, some of these areas, like Las Acacias, have no open space. So I have no idea where the new housing will be built.

Additionally, the government will be pumping about $500 million into housing credits that can be used to subsidize purchases in the private housing market.


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