I ,,F-1 I rf4 REST RIC TED

1Ali EE8j -U~3AJ 3 wReport No. WH- 12:a

This report was prepared for use within the Bank and its affiliated organizations.

They do not accept responsibility for its accuracy or completeness. The report maynot be published nor may it be quoted as representing their views.

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RECENT ECONOMIC DEVELOPMENTS

IN

VENEZUELA

July 24, 1963

Department of Operations

Western Hemisphere

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rT TT n ' WT d- V W rNT TT M' A T l. 'PmQCUREC EQUIVLENT

Official Exchange Rate

US $1. 00 = Bs. 3. 35 (bolivares)Bs. 1 = US $0. 30Bq 1,000,000 = TTS 300.000

Free Market Exchange Rate

UST.00 = Bn. 4. -9;

V E N E Z U E L A

Table of Contents

Page io.

ASIC ÄATA......................................

UifÄRY AID CONCLUSIONS ....................... ii

I3 TRODUCTION ................................... 1

CHAPTER I ECONOPIC SITUATION IN ARLY 1962 ... 1

CHAPTER II RECENT ECONOMIC EVEOPM,ENTS ........ 1ProduCti.Jon andInesmen+. 1

Fiscal 3ituation .................. 3Monetaryl ",it"ution ...............Prices, Jages and Unemployment ... 4LExternajl Financial PlositonU LU...... 1

~7HAPE III URRENTý ECNOI AXn POLTICýAL

SITUATION AND SHORT-TERM P,OSPECTS.. 6

CHAPTER IV LONG-TRM, PROPECTS - PLANNED

CHAPTER V CREDIT.ORTHINESS .................... 9

STATISTICAL APPENDIX ........................ 11

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BASIC DATA

Population: 7.9 million (June 1962).Increasing at over 3% per year,

Area: 352,000 sq. miles.

Gross Domestic Product (1962): Bs. 28.1 billion (1957 prices).

Real Gross Income (1962): Bs. 24,6 billion (1957 prices).

Per Capita National Income (1962): The equivalent of about r'00 int,r-nrr of anroxnc imatp murchasingpc.qer.

Gross Fixed Investment (1962): Bs. 3.93 billion (197 prices).

Expenditures: 18% of GDP in

Revenue Svources.Oil 'ector 53

Customs Duties 7,/

Exchange Profits 17

Net Export Receipts (1962): ,1.6 billion of which petro-leum sector l.1 bil-1On

__mportS op.1 billion

U-LL-I.±C'L kJVJU c~[U U ±±L [1[ j

7eserves A pril 1957 6639 million

External Public Debt (Pec. 31, 1962): 8361 million

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SUMMTAPY AT rONr.T.STONTT

1. Venezuela's current economic situation is better than in thepast. thrpp vears.- G,ross. TDomestic Prodiirct inreasedP byn 794 i n 196)(2as compared to 1.1% in both 1960 and 1961, and the Government succeeded,thrOllgCh it mo rnetaqrr ndr fisQ^al plicies, in proecin 1henbanne ofpayments and in maintaining internal stability.

2. The fiscal operations of the Central Government produced acolnside-alble- ~~,c cas" Surlsl and in.~ cae gornme vnt.n sav-ings ar result1

of a substantial rise in exchange profits emanating from the April 1962devaluation of the exchange rate. /Current ----- ture were --- u,- - A--

control and Central Government investment expenditures, principally its~ U±LV LIiLJUO, UILI LU LUJ U L-mLJ e n o fie ~ 0.1 __ -i~ -L 1 UL19

within the public sector, declined. The cash surplus was used to re.-O4U6 LIH, UEU L 01.Li Ul u VEIIJIIEU ld UO l[utfas (;asdllJ~.

. e reduction in bank credits outstanding to Uhe Government,together with a modest 7% increase in credit to the private sectorwere the main monetary forces. Since they more or less offset eachother there was little change in the money supply.

4o With a relatively stable monetary situation, and after twoyears of economic stagnation, there was little room for sharp changesin the level of prices. The cost of living changed very little, andthe 37o rise in the cost or fo2eign excnange for many goods producedonly a limited 11% increase in the wholesale price index for importedgoods. This modest increase was the result both of the restrictivemonetary policy and by a competitive situation characterized by sub-stantial unused productive capacity in many lines.

5. The measures taken by the Government helped improve thebalance of payments. Whereas total foreign exchange receipts werevirtually unchanged compared to 1961, imports declined further fromtheir 'Low 1961 level, due primarily to the devaluation.

6. The economic policies of the Government have, however, notsucceeded in restoring the confidence in the private sector. AlthoughGDP increased by 5.7%, compared to 1.1% in both 1960 and 1961, dueprimarily to greatly increased (9.5%) petroleum production, risingmanufacturing output, and a revival of the private construction industry,there were no great or general increases in private investment. The netoutflow of private capital also continued at a relatively high rate,

7. The short-term outlook is dominated by the November 1963elections, and there is little hope for an increase in private invest-ment this year. Further revival of the building industry, increasedpetroleum production and larger government expenditures should, never-theless, provide enough stimulus for a rate of growth in the same orderas that achieved in 1962. Should the election produce another moderategovernment the Prospects are good for a faster recovery in 196L.

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8,, The fiscal, monetary and balance of payments prospects alsopoint to a year much like 1962. The budget projects a substantialsurplus, although not as large as in 1962, to be used primarily toreduce the public debt. Central Government investment expendituresare planned close to the 1962 level. The continuation of a budgetarysurplus should help to maintain monetary stability, particularly sincemuch of the excess liquidity of the banking system is concentrated ina few conservative banks with limited willingness to expand their creditoperations. Although no major changes are foreseen in the balance ofpayments, there is the danger of a renewed extraordinary private capitaloutflow in connection with the election. It is, however. likely thatthe stable and relatively tight monetary situation will prevent any suchcapital flizht from assuming very larae nrnortions

9. A Four-Year Develonment Plan (1963-1966) anlling for an 8% nerannum rate of growth of GDP has been prepared It is based on a yearlyrate of growth in netroleum oduntion nf shont ig which is in qares-ment with the rate of growth projected by the Bank in previous reports.The 8% over-all rate of growth, however, appears unduy ontimistic inview of the fact that the level of private investment, projected to in-creAse to 7/Yb nbve thei 1QJA leal anrn 1 b-in OnTnve ur+h a m-%n

nounced return of confidence in the private sector. Public investmentsare nlanned at a more l+, j - 1 -)yavl al+hnh r, + n cn+ le +n rhot

extent these plans have been incorporated into the 1963 budget and arebe.ingr used as a bai o oiydcsos Hwvr ftepba nvestment program is carried out substantially as planned and if there

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substantially reduced, there appear to be reasonable prospects for a

±p a1 4- X- 4± UIUt C- yer4vJ. ±uL carr4LyIg OUU 01 uiie 1.uraLeal LvUeomnb tLl-

substantial borrowing abroad. The external public debt of Venezuela asu1 Dcember 31, 194 amounted tO $362 mlillon 01 WhCic $14 millOn WaSundisbursed. Total debt service in 1963 is estimated at $114 million

C\ on,~rtr7c of net lor4 gr exchange .1 I-..4 1 ri L2(i-_ !4 .--W- rio~Lt (p tjLi U iU Vtt L A1bi~idUI 6 Ul aUU U Q.af UZ4 -.±Ui -L11

1962. The debt service declines very rapidly after 1964 and amounts toonLY about $14 milion I 17. In view of this rather small debT burden,the prospects for continuing growth in foreign exchange earnings and thegeneral strength of The Venezuelan economy, there is a considerable marginfor contracting of new debt. It is at the same time desirable that thismargin be used to finance, on appropriate terms, high priority projectswithin the public investment program so that its use will make as greata contribution as possible to the achievement of a high and sustainedrate of growth.

INTODUCT TON

1 iThe 1st connnmic report on Vene l (1J-122) was issued

October 19, 1962. It dealt primarily with economic events in 1960an 10A1 th+b wl mn A i,rnI+ the Vanovn'mclan connnny in thP IQ 01

having been treated in a previous report as well as in the study

in 1959.

2. This report is concerned with developments in 1962 andW-LULI U11Ze conoic s_UCaULLI UU U;It P1:;U1iUbIIJI1

clusions of the previous report are briefly given as background.

. The last economic report concluded tat the Venezuelaneconomy was basically strong with an export sector capable of pro-viding increasing foreign exchange earnings, with fairly extensivesocial overhead investments and with an adequate rate of savings.However, following rapid growth during the period before 197, therate of growth declined in 1958 and 1959, followed by virtual stag-nation in 1960 and 1961. This reversal was due partly to a slowdownin the rate of expansion of the petroleum sector and partly to thecollapse of the building and real estate boom, The stagnation wasaccompanied by, a financial crisis marked by ;uassive capital flightinduced by the unstable internal political situation, che sluggish-ness of the economy and by fear in the business community of theGovernment's economic policies.

4. Government policies in 1961-1962 were designed to containthe financial crisis and to reactivate the economy. An exchangereform, carried out early in 1962, together with plans to increasepublic investment and sound fiscal and monetary policies were expectedto lay the basis for a revival of the economy. The missing ingredientat that time was business confidence strong enough to stop the with-drawal of resources from Venezuela and to induce investment in domesticenterprises.

5. While no immediate spurt in economic growth could be fore-cast in early 1962, a general improvement in economic conditions wasexpected. In the longer run it was believed that a rate of growth ofperhaps 5% - 6% could be attained given relative economic and politicalstability and a return of business confidence.

II. RECENT ECON0P,C DEVELOPMIENTS

A. Production and Investment

6. Following two years of very small increases in Gross DomesticProdilt l cnomic subtnt ncrept mi a7 ) aseretaered in 19620

Whil al ecnomi setor, except mining, appear to have shared in

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this advance, it is clear that the sharp increase in the rate ofgrowth of the petroleum sector and the reversal of the decline inconstruction provided the active force. Other sectors of theeconomy grew more or less in response to the increased demandgenerated by the netroleum and construction sectors.

7. Behind the surnrisinalv large increase in petroleum outout(9.5%) were very complex and partly impenetrable causes. Increaseduse of liaht Saharan nil instnad of Mildle Fastern oils in Euroneincreased the demand for heavy Venezuelan crude, which is complemen-tary to the light oils in orpnting thn nrnii-t mxi most annropriateto the Western European market. Continued boom conditions in Europe -some rcvivnl in thp 1T1q - nlsn -nntrinmtr t. f$rnnhAl-e rzP.mnn nondi3-

tions. Greater political and economic stability in Venezuela relativeton otherproucn arassem to linted to the deczision toeincrease production. However, since the existence of substantial

large-scale increases in local costs, only a limited part of the bene-fM+o qnc--rrlA- +c IT -1a, ~ -ln~ Qn-,e , for a' r ,,-~ tae "b-lc

There were no signs of increased exploration and net reserves decreased

ing, in the short run, to increased shut-in-capacity.

8 The revival of construction activity appears to have beenlimued to the private sector while public buldming conutruct on

actually declined. However, the injection, under a government pro-grait, of some BS. 200 millIon (Bs. 12) million from oil companiesand Bs. 75 million from the Central Government) into the mortgagemarket appears to have been one of the main forces behind the revivalof private building activity.

9. Industrial production increased substantially in 1962,partly in response to the increase in total demand, particularly forconsumer goods, due partly to growth in the petroleum and constructicnsectors and partly to an autonomous increase in demand. Ine over-alllevel of imports declined slightly indicating that the increase indemand was channeled to domestic production by the protective effectof the exchange reform and increasing quantitative restrictions.Although no statistics are available, it seems likely that thesedevelopments were accompanied by a change in the composition ofimports so that a decline in imports of consumer goods was more orless offset by an increase in imports of capital goods and raw materials.

10. Much of the increase in production appears to have occurredin fields, such as petroleum and manufacturing industries, for instancetextiles, with substantial excess capacity. There was therefore limitedneed for additions to production facilities and there was no substan-tial increase in fixed capital investment relative to 1962. The avail-able figures indicate that some accumulation of inventories took place

during the year. Apart from this, and the revival of the construc-tion industry there were few signs of increased investment activity.The petroleum companies increased their capital expenditures some-what, mainly in transportation and marketing facilities, without,however, reaching the level of their charges to depreciation, indi-

3tng~ rcorniued di sinve(rstment.l

14~ The fiscal situation brightened considerably in 1962.Revenues increased sharply over the 1960/1961 1/ level due mainly to

reform. Together with a somewhat reduced expenditure level thisrevenue increase produced a substantial cash surplus in place ofearlier deficits. This surplus was used to reduce the Government's

12, The exchuge reform widened the spread between the pricepaid for foreign exchange by the Central Bank to the oil companies

I- n nn/10%cb - -t ~ 4 ,%Do J.UY/ QuJ aN lu(e price received for tne buik o its bales offoreign exchange to importers (Bs. h./US$ as against Bs. 3,34/US$before April 1962) and douolea the exchange profits of the 3overnment.This more than offset slight declines in other Government revenuesand provided the basis for a substantial increase in total revenues,Collections from the oil companies declined somewhat from the 1960/1961 level, but the b96u/1W61 receipts were heavily influenced byextraordinary payments stemming from the switch to a "pay-as-you-go"system of tax payments. The decline in the extraordinary revenues dueto this factor, in 1962, was largely offset by the effect of growthin petroleum production.

13. Current expenditures were kept under control in 1962. Asmall decline in over-all expenditures was accounted for by a dropin Government wage and salary payments following a general cut inwage and salary levels early in the year,

314. Central Government savings, equal to about 7.9% of GDPin 1962, were substantially (28%) higher than in 1961. Investment,on the other hand, declined. This decline was confined to the in-direct investments of the Central Government while direct investmentsshowed a not inconsiderable increase. No information on over-allpublic sector investments in 1962 is available in Venezuela, but allthe evidence, e.g. decreasing Central Government investment and afurther decline in public sector building construction seems toindicate that such expenditures were lower than in 1961, Since theyapparently dropped in 1961 as well it seems clear that they were

1/ The fiscal year was changed to coincide with the calendar yearin 1962. A budgetary period of 6 months, covering the secondhalf of 1961, was used to effect the transition. No reliablefigures are available as a basis for comparison for the calendaryear 1961.

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substantiailly lower in 19o tnan in lyou0 inis ie in suarp contrastwith the requirements of the Development Program, which calls for an"7 increase in average investment over the 19ou level in yo3-9oo,and with Central Government budgetary capabilities.

15. As a result of the changes in revenues and expenditures avery large cash surplus emerged in place of the considerable deficiusrecorded in previous years. The net improvement over 1960/1961 wasin the order of Bs. 773 million. The surplus was used to reduce thedomestic indebtedness of the Government, particularly by retiringbonds, and to replenish the Government's cash reserves.

C. Monetary Situation

16. The over-all monetary situation remained stable during 1962.Total supply of money and quasi-money increased slightly. With goldand foreign exchange reserves virtually stable, the increase inCentral Government deposits was more than offset in its monetary im--pact by an increase in credit to the private sector and in the un-classified assets of the banking system.

17. While the money supply contracted somewhat in 1962, timeand savings deposits showed a tendency to increase rather sharply(10% in 1962) after several years of continuous decline, a tendencythat has persisted in early 1963. Although this could be interpretedas a sign of increased confidence on the part of savers in theVenezuelan economy, it is more likely the result of the discontinu-ance of interest Dayments on demand deposits.

D. Prices. Wages and Unemnlovment

18. The nver-qll level of nrines_ s measured by the wholesaleprice index, appears to have risen less than 5% in 1962, a very smalli'norpAqp in vipi.Tof th])pe-change in tJhe exchainge rate duiring the irn,The increase in prices was limited to imported products which rosein nrice about 11- while the prines of rnmestir nrnHurts remainedvirtually unchanged. The cost of living, heavily influenced by

do es i T-prod- ts1r+. i-ir+rf- ,iOnr1 ir fnr)rI,=!+jff'o H-e-liari orlmpi nca a h. - HoTw.-

ever, unemployment remains one of the most serious economic and socialer.ble T nnhn+wy There i;S onmFUr nAanno +ha+ + n+ iconstruction activity may have led to some reduction in unemployment,parti, ,ilnrhlir 4 O n o

L /* ±ial~ aX U J L .L± ,LJd L.. l idO bU_U E j u _ L ~ L vU [L u.LL I u uimprove in 1962. The fall in foreign exchange reserves was arrestediU 161. U Linie e.1

in 1961L was maintained.

20. Despite the substantial increase in petroleum production

recorded in 1962, the net foreign exchange receipts from the oil compa-nies remained virtually unchanged at about $1.5 billion. This was due

mainly to the changes, previously noted (para. 12), in the method of

tax payments in 1961. but also to a cut in oil company current expendi-tures which were only partially offset by an increase in capital expend-itures. The export of iron ore decreased further but the total declinein non-oil receipts was slight, as there appears to have been some in-crease in the exoort of other products. Over-all there was a drop inreceipts of about US$20 million, or about 1%, to $1,681 million.

21. Imports, already at a low level in 1961, declined someUS$56 million or about .% tn n1bout, PQ65 million. in 1962. This reflectsboth the exchange reform and the tightening of quantitative restrictionsas nnrt of the indutrial nrnmotion PoliciCie- of the Government. Since

these have only been pursued vigorously for a relatively short periodthere is as Yet 1ttle evidence of a changing strut.urP nf imnorts.

22.~~j,+ Th e utlwo piaecpit n1 ,rn+.inue_r in 1Q62 to abocutthe same extent as in 1961, or about US$250 million, despite the greatly

stock market value in Venezuela. Although this represents a substantialrd UCtion i n relation to the- peak, in 190 it is still seae.Tlip

exact nature of the capital outflow is not known but it is alleged that

a .4_UL;j).-.V. U1)L-U U_iL _L111LrL1 U re it n e aIUL ma for-a Toore

or-less permanent part of the Venezuelan balance of payments. ShouldU11_Lsbe th case, au u Uoesic bav-"it-oU11L1_L1f UU ouuui;i'Ji.

transferred abroad on a continuing basis, it would cast serious doubtson tie long-term growh prospectu ou hne counuty. vU u1i vui manu,seems probable that a large part of these remittances are induced bypolitical and economic uncertainty and that ese reuluuLviCis ae likeYto decline in the event of a pronounced return of confidence.

23. The compensatory monetary movements were marginal in 1962, asthey were in 1961. Ine Government made substanuia payments on theUS$200 million bank loan, contracted in 1960, while its long-term bor-rowing was only slowly being disbursed. The official gold and excanuereserve was virtually unchanged (plus US$5 million) as were the holdingsof the commercial banks (minus US7 million). In the first four monthsof 1963, on the other hand, there was an increase of $104 million in thesereserves raising the total to about $64U million. Tnis increase occurruudespite the prepayment, in January, of a large part of the 1963 serviceobligations on external public debt.

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III. CURRENT ECONOMIC AND POLITICALSITUATION AND SHORT-TERM PROSPECTS

24. The current economic situation is, to a considerable

extent, dominated by the specter of the elections in November 1963.While there is a general feeling that the Accion Democratica partyof President Betancourt is strong enough to elect its candidate against

any realistic combination of opposition parties, it is also acknowl-

edged that the party cannot hope for a clearcut majority of Congress.

There is thus pressure on the parties of the present government to

continue their coalition and to agree on a candidate that could polla substantial majority of the votes. It is possible that the need

for such a compromise will be recognized during the process of choos-

ing candidates, which is about to start. Until the candidates are

known it is impossible to make any predictions about the strength or

the make-up of the new government, and well informed people in Vene-

zuela are sharply divided on this issue.

25. Closely related to the issue of the election is the muchpublicized issue of terrorism on the pnrt of the extreme leftwingparties. This terrorist activity seems to be very difficult tocontrol. However, it is gradually alienating moderate and generallypassive groups and may be regarded as a last-ditch effort to wreckthe nrecariously established Venezuelan democracy, Previously passiveelements in Venezuelan society are now beginning to manifest somepolitical interest. The formation of the Accion Venezolana Indenend-

iente, a group of business and professional men dedicated to theselection of good candidates by the political parties in the comingelections, is one sign of this interest. It is also reported that

are beginning to organize in non-political groups that have succeededin defeating communist candidates insvea elections at the Univer-sity. The only worry at the present time is that the extremists will

sabotage, stealing of ballot boxes, etc., which might put the wholedeorai proes in direut a4~ nd/or lead-. to i -4nte-rve.ntion byr the

Armed Forces. This worry is based on the knowledge that the extremist

Since the political activities of their parties have been outlawed,nthy canuu stanu fur elecLou and woul luoe tneir parziameutary im-

munity as soon as a successful election is held. This would make themliable to immed1~iate prosecutio[n for pariipatILUi inl terroris activities,

26. With the political situation uncertain, there appears tobe little hope for any substantial increase in the rate of growth ofeconomic activity this year as compared to 1962. Private investment,which showed little increase last year, is unlikely to rise althoughfurther injections of public money (Bs. 100 million from oil companiesand Bs. 60 million from the Central Government) into the mortgagemarket will probably help private construction. Petroleum production

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as of May 22. 1963. was 3.80 above that achieved during the sameperiod in 1962. However the petroleum sector wage bill willincrease this year, in contrast to 1962. hemise of wage inc:easesand a cut in working hours. The net result is likely to be a con-ti_nindin-pPq in "li np~.rr)1p1rn 'i~v-I ~vt.~,tirnto thp Poonoilv

at about the same rate as last year. The exchange reform will havea grenter effAnt this yur than in lQ'P- which should Dive some hel,to domestic manufacturing industry. Another demand increasing effectwil -. comep f-rom puiiIr p-vnpn res.1y, whichl are ex%rpcted to risqpor

rapidly as the election approaches.

27. The budget for 1963 envisages substantial increases in bothcurn reveues pr_na.4.Cly from tJfh e nnrlQ -N-nm.a' 4IlLI

exchange profits, and current expenditures. With expenditures, parti-

expected that Central Government savings will decline slightly, but

room for a considerable cash surplus. Unless the autonomous agenciesstep up tneir inIvesUenU aculvuivie- fLIC eu uy inuptenueunu UVtJrruwag1or their own resources, it appears likely that over-all public invest-ment wIll taLL short Of the 1960 level and iar short of Tn averagelevel envisaged by the Four-Year Plan.

28. By drawing down accumulated cash balances and utilizingthe cash surplus IT is expected that net repayments of some Bs- 40Umillion will be made on domestic and external public debt. The netrepayments on external public debt are due to the relatively shortmaturities of the old debt and the slow disbursement of newly con-tracted debt. The budgetary picture seems to contrast with the pro--jections of the Planning Office in this respect as well, since thePlan envisages a very substantial net inflow of foreign capDital onGovernment account during the period 1963-1966.

29. The continued budget surplus and reduction in Governmentborrowing is likely to continue to have a stabilizing monetary effect.Because much of the present liquidity in the banking system is immo-bilized in a few conservative banks, reductions in Government indebted-ness will permit expansion of credit to the private sector in linewith recovery in production, without increasing the danger of a mone-tary inflation. This stabilizing element may prove valuable as theelection approaches and capital flight may again become a problem.

30. Given these general impressions, it appears reasonable toexpect some further economic recovery in 1963. Should the electionsin November produce another moderate left-of-center Government witha clear majority in Congress, there is every reason to believe thatmore rapid increase in total production will take place in 1964. Theimpetus can then be expected from private investment. both in industryand in construction, since much of the excess capacity in these fieldsshould be put to use fairly rapidly.

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k t LJCdLJ t_C 1U L U~L± V U U,V JL t; :J F

external side. Receipts from the oil companies are projected togrow while t'Hose from other ex-ports pr"Licip&al_ly ironL ore, are1ltassumed to continue to decrease. Imports ma7 decline further sinceute effect of the exchange reform will be felt during the entire

year. A substantial increase in the balance on current accountuhus appears probable.

32. There appear to be no prospects for an immediate declinein private capital movements from the ;250 million registered in thepast few years. They may even increase somewhat towards the end ofthe year if a more pronounced capital flight occurs in connectionwith the election. Such a capital flight should not reach verylarge proportions because of the relative tightness of the monetarysituation, the low real estate and stock market values and the de-valued foreign exchange rate.

IV. LONG-TRVI PROSPECTS - FLAINED INV 5T INTSAND THEIR FINA\CING

33. In order to co-ordinate and spur the efforts to achieve ahigh rate of long-term growth, the Venezuelan Planning Office hasprepared a 4-Year Plan to be executed during the period 1963-1966.The goal is an 8' per annum rate of growth of real GDP implyinga $% per year increase in GDP/capita. A secondary target is anincrease in employment sufficient to cut unemployment by 5O/. Under-lying the rate of growth is a projected. increase of 4% per year forthe petroleum sector, which is generally in line with the projectionsmade by the Bank. Using 1960 as a startin. point, the Plan projectsincreases in investment equal to an average of about 8% per year forthe public sector and 7,1 for the private sector. The public sectoraccounts for about one-third of the total investment.

34. The level of public investment appears feasible in relationto 1960 investment, and the total is fairly well supported by thelist of projects included in the Plan. However, the evi ence ofdeclining public investments in the past two years cast some doubtswhether Government's fiscal policies are based on the Plan. Thesedoubts are strengthened br the fact that the total investments of theCentral Government included in the budget for 1963 are slightly lowerthan those actually achieved in 1962. ioreover, this budget includesabout 3s. 122 million in net repayments on external debt while thePlan calls for net disbursements to the public sector of forein loansof about Bs. 351 million on the average per year.

35. The financing plan for the public sector is based on aprojection of ubllic sector savings more or less in line ith thelevel achieved by the Central Government in 1962, or that includedin the- 1901 hiwip-P.t A subsqta.ntial redutioin in donmestlic borrowing

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and additional revenues from present and new tax measures are projected.There is, however, no indication that new tax measures are being active-ly prepared. All the projects for which foreign financing is plannedseem to be under consideration by various financing agencies. Inaddition, there are probably some further projects included in the Planthat would be suitable for such financing.

36. The iroiections of nrivqte investment have been arrived atby subtracting the estimates of feasible public investment from thetotal investment comnatible with the armth and emnnVment targets. Theamounts arrived at appear unduly optimistic compared with investment inl960_ 1961 or 1962 Toachive theiargt tePlanning n-ffice honps tonuse flexible credit and promotion policies. However, it would appear

tha ±h~crcil acoristhe return of co-fdence in th uueofthcountry within the private sector and a willingness to keep and invest.qvan ginlfon,7iiola

37 h orY a Pa r j cs agross us of e t r a re u cs

amounting to about $1.3 billion. The public sector is expected to re-

appears, however, that on a net basis the Plan envisages continued capi-tal outf-low, inluin irngrn remttaces TheLLr1C1 Li quir grossZ flowsV,particularly of private capital, would be greatly reduced if capital

v..ven witn a reducuion in capital ilignt and some return ofconfidence it is possible that the investment targets are too optimisticand a scaling down of the projected growth rate required. On the basisof a preliminary analysis of the Plan it would not be prudent to assumethat long-run economic growth in Venezuela will exceed the rate of 5-6projected in previous Bank reports.

V. CREDIT1WURTHINESS

39. The external public debt of Venezuela as of the end of 1962,amounted to US$362 million, of which US$127 million were undisbursed.Total debt service in 1963 was estimated at US$114 million, or about 7%of net foreign exchange earnings of about $1.7 billion in 1962. However,the debt burden in 1963/64 is heavily influenced by a relatively shortUS$200 million loan obtained from a group of U.S. banks. The debt servicedeclines very rapidly after 1964 and amounts to only about US$14 millionin 1967.

40. Since the last economic report was written in 1962 theVenezuelan Government has succeeded, through its monetary and fiscalpolicies, in protecting the balance of payments, increasing the levelof public savings, and laying a foundation for a resumption of economicgrowth. It has not, however, managed to expand the investment activity

- 10 -

of the public sector, nor in inducing a large increase in privateinvestment. Nevertheless, Venezuela exDerienced a substantial eco-nomic recovery in 1962 due partly to greatly increaed netroleumproduction and partly to a revival of private construction. Indus-trial production also expanded in resnonse to inead demand nndunder the protection of the de facto devaluation carried out inApril, 1962. The outlook for 196( and 1Q,6Z iq fn" n nnrnnt.inn

of this economic recovery, provided there is no drastic change inthe policies of the Government .Pasar nuto the Noember elecion.As for the long-term prospects, there have been no developments thatwould tend to change the ugment of,a+ ps-e+ t a -rate of growth of 5% - 6% is possible, even though the 8 projectedby the Plannin nffen anpasn un -+uly o mistC. En the lowerrate of growth assumes, however, that confidence will return in theprivate sector- nnr+ +.1n+ ^ilr Venezla ..e u'santially reduced. It is also based on a substantial program of public

--- - e - n CLUIUCLU _. t1Z1U.L1iUJ. U.LULU'jU'obtained on appropriate terms for high priority projects, it is cleartt the Vezuelan e myu could support the service payments result-ing from large amounts of additional debt.

STATISTICAT, APPENDIX

Table No.

1 Venezuela - External Public Debt Outstandingincluding Undisbursed as of December 31, 1962.

2 Venezuela - Estimated Contractual ServicePavments on External Public Debt Outstandingincluding Undisbursed as of December 31, 1962.

3 Gross Domestic Product by Sector of Origin,1998i1962.

h Percentage Changes in GDP by Sector nf nrigin,1958-1962.

5 Contribution to Change in GDP by Sectors of Origin,1958-l962.

6 Rea~9Rl Grs Icm, 98-92

7 nrIndexes of Industrial Act++r 1O7-1962

8 Gross Domestic Inetet 1958-l1962.

10 Pri ce Movmets 19 '-92.

11 Monetary Survey, 1960-1963.

12 uUUdgtay PeriLformance, 1959-1963.

13 Income, Costs and Net Profit of 0il Companies,1955-1962.

14 Balance of Payments, 1960-1962.

Table 1

EXTERNAL PUBLIC DEBT OUTSTANDING INCLUDINGHDThBTRRE AF ,F DECEMR 21 1Q62

Debt Repayable in Foreign Currencies(T" +houandsA of U.S dollar equivrren+s)

Debt outstandingtm December 31. 1962

Net of Including

rPr)rAT 7'irT7DATAT D)TTDT TO 71T=r 1) I rn 7)z 00

11-Lvar tely-placeu aeut 118,97 -"0 2Z

n '% , / Ir nf

hin loans WU,-L ±1,uU

u. uovernment loans 012 5 -L _

Export-Import Bank 79,137 97,401DLF 2Y215 14,9190AID - 40,000

Loan from Italian Government 32.000 33,000

Statistlcs DivisonIBRD-Economic Staff

April 5, 1963

Table 2: VENEZUELA -- ESTIATED CONTRACTUAL SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSEDAS OF DECEMBER 31, 1962 L

:Debt Repayable in Foreign Currencies

(In thousands of U.S. dollar equivalents)

Debt ott--standing Payments during year standing Paynents during year

Year plus un- Year plus un-disbursed Amorti- In- Total disbursed Amorti In- TotalJanuary 1 zation terest Januar zation terest

- Total debt _ Privtely-placed dbt

1963 361,788 100,120 14,162 114,282 1963 118,9397 74,405 5,996 80,#4011964 261,668 72,469 10,559 83,028 964 -746-11965 189,199 40,761 81,187 48,948 1965 8,380 2,2'78 637 2,9151966 148,438 21.,658 6,119 27,777 T96~6- 6T T -- 278 426 2O1967 126,780 9,118 41,845 13,963 1967 3,824 2,278 214 2,4921968 117,662 8,201 41,363 12,564 1968 1,546 1,028 / / 1,1051969 109,461 7,507 3,953 11,460 1969 518 518 16 5341970 101,954 5,656 31,614 9,270 -1971 96,298 5,775 3,357 9,1321972 90,523 6,845 3,092 9,9371973 83,678 7,952 2,789 10,7411974 .75,726 7,599 2,483 10,0821975 68,127 7,979 2,177 10,1561976 60,148 7,769 1,865 9,6341977 52,379 7,083 1,588 8,671

IBRD loans IDB loans1963 45,000 - 1,064 1,064 T96 Y3 00T 1 , 1551964 45,000 - 2,041 2,041 1964 13,000 70U 536 1,2361965 45,000 - 2,587 2,587 -196-5--129300- C7i G-13T~1966 45 ,000 1,694 2,564 4,258 1966 11,600 1,100 652 1,7521967 43,306 1,793 2,465 4,258 -1967- 10i50 riT0-- 588 --- 16-8-a1968 41,513 1,898 2,360 4,258 1968 9,400 1,100 526 1,6261969 39,615 2,009 2,249 4,2:58 19U9 8,u 1,I0Q -4&2 -56--1970 37,606 2,126 2,132 4,258 1970 7,200 1,100 399 1,4991971 35,480 2,250 2,008 4,258 -T971-¯¯6-;T0^ TiT00 - 334-r4341972 33,230 2,381 1,877 4,258 1972 5,000 1,100 272 1,3721973 30,849 2,52C1 1,738 4,258 -~1973----3-900 - --- I100-- 208--- .308-1974 28,329 2,667 1,591 4,258 1974 2,800 400 156 556.Lu3 i 3,604 ,,Z .L,430 4,2'>) -T9T5~¯2,4UU -4U 131976 22,840 2,987 1,271 4,258 1976 2,C00 400 110 5101977 19,853 3,163 1,095 4,258 -97T 1600 4C'0 86.. 486~

See footnote at end of-tabe.

Tb1e 2. VENEZUELA - ESTIMATED CONTRACTUAL SERVICE PAYMENIS ON EXTERNAL PUBLIC DEBT OUTSTANING INCLUDI3 UNDISBURSEDAS OF DECEMBER 31, 1962 / (CONT.)

Debt Repayable in Foreign Currencies(In thousands of U.S. dollar equivalents)

Page 2Debt out- Debt out-standing Payrents during year st anding rayvients during year

Year plus un- YEar plus un-disbursed Amorti- In- To tal disbursed Amorti- In- TotalJanuary IL zation terest January zation terest

UT.S. Governmernt loansTotal debt Ex-Import Bank

1963 152,391 25,715 45689 30,404 1963 97,401 25,655 4,299 29,954:1964- 126,676 26 ,158 3,998 30j 156 19'64 - 7 74-6¯ -- 2' ¯-9--¯~ ~ 2 9 39~1965 100,518 27,784 2,917 30,701 1965 45,648 27,699 2,181 29,8801966 72,734 3,584 1,742 5,326 1966~ 17949 3-47 ¯ 970 4-1967 69,150 3,947 1,578 5,525 1967 14,475 3,474 771 4,2451968 65,203 4,175 1,I+V0 5,575 1 3y329 575 -3,9041969 61,028 3,880 1,226 5,106 1969 7,672 2,884 393 3,2771970 57,148- 2,430 1u,83 3¯513 -970 478 1-284 248 --- 5321971 54,718 2,425 1,015 3,440 1971 3,504 879 187 1,0661972 52,293 3,364 943 ¯4T -1972 --2,625 750-- 140-----890-1973 48,929 4,332 843 5,175 1973 1,875 750 97 8471974 44,597 4,532 7¯36 5-Y2~6¥ -1974 1,125~_~~~ 750 54----1975 40,065 4,757 609 5,366 1975 375 375 11 3861976 35,308 4,382 484 4-,866-1977 30,926 3,520 407 3,927

U.S. Government - Other Loan from Ital-an GovernmentTV9673 54i990 -60 390 450 1963 33,000 21258 2,2581964 54,930 60 697 757 -Y964 33¯9000 9999 - 29 135¯-¯12i-3-4-1965- 54i870 -85 - 736 -821 1965 23,001 9,999 1,435 11,4341966 54,785 110 772 882 1 .-- 2¯ 13,00 Z T35 -3,71967 54,675 473 807 1,280¯968 ¯¯ 5 4 2 ¯¯¯ 8 4-6 ¯ 82 5~ ¯T - l7 -.1969 53,356 996 833 1,829 -- es all debt

970 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ U ¯¯ 276-¯~¯1T4215 T8 3 Icudsaleb flsted in Table 1 prepared:L975Ž-,60~~1TI46-~ 83~198TApril 5, 1L963.1971 51,214 1,546 828 2,3741972 49,668 2,614 -¯T03 -39 171973 47054 3,582 746 Ä,32Q1974 43 9472 3,782 682 4464 Statistics Division1975 39,690 4,382 598 4,980 IB st-Econoic Staff1976 35,308 4,382~¯~¯-¯¯-484 ... 4,866 April 5 1S9631977 30,926 3,520 407 3,927

Table 3

GROSS ;,_;OMESTIC PRODUCT BY SECT=i OF ORIGIN', 1958--1962(In billions of 197boliva~e

1961 19621958 1959 1960 1961 1962 1 T TT III IV

Total GDP 24.32 25.90 26.19 26,58 28.10 6.63 6.92 7.05 7.02 7.10

Export Sector 7.44 7.89 8.08 8.07 8.68 2.05 2.15 2.16 2.20 2.16

Petroleum 7.06 7.h7 7.61 7.73 8.36 1.97 2.07 2.08 2.13 2.08Mining .3 n .n n.,7 n.3- 0.3 0.08 0.08 0.08 0.08 .

Durable Goods 3.80 3.68 3.05 2.86 3.l 0.72 0.72 0.79 0.79 0.83

Construction 1.78 1.62 1.36 1.13 1.22 0.27 0.26 0.31 0.32 0.3).Manufac0. 0.5 0.6 n n8 0.18 0.20 0.22 0.21 0.21

Trade 1.26 1.16 0.95 0,96 1,08 0.28 0.27 0.27 0.26 0.29

No-ual JGoods .07\ 14.33 15.06 .66.U i6.28 3.U5 £4,0) I6.10 4.J2 L4.L3

Manuf'acturing 1.85 2.12 2.15 2.25 2.39 0.56 0.62 0.61 0.57 0.58Public Services 2.67 2.83 3.00 3.33 3.3h 0.83 0.82 0.83 0.83 0.85

Totals may not add due to rounding.

Source: Central Bank of Venezuela.

Table 4

PEIMCEi5iPAoE DA BY SEIUCZ; O- wUR Ton r-J, 19:5n-1962

1950- 1959- 1960- 1961- Iv 1960- 1962 IV 1961-1959 1960 1961 1962 1 1962 1-11 II-III III-IV IV 1962

Total GDP 6.5 1.1 1.1 5.7 4.5 1.9 -0.h 1.1 71

Exoort Sector 6.0 2.4 - 7.6 5.4 0.5 1.9 -1.3 5 4

Petroleum 5.8 1.9 1.6 8.1 5.0 0.5 2.h -2;3 5Mining 10.5 11.9 -27.6 -6.0 - - - -

Durable Goods -3.2 -17.9 -6.2 9.8 -l.h 9.7 - 5.1 137

Construction -9.0 -15.0 -16,9 8.0 -3.7 19.2 3.2 6.3 25,9Manufacturing 18.4 -16,7 1.3 10.5 11.1 10.0 7.5 - 16.7Trd -.79 -18.1 1 1 12. -3 - -3.7 11-5 3.b

o\Tn-Dhirahle gnd 9.6 .6.0 9.0 5.2 .2 -1.9 2.2 6.8

Manufacturing 1 . 1.h .7 6.2 10.7 -1.6 -A6 1.Public Services 6.0 6.0 11.0 0.3 -1.2 1.2 - 2.h 2.!

e 97 17 1. 7 57 1.9 -1.1 1.5 8.5

Totals may not add due to rounding.

Sou,rce: Ccntral Bnk, of Venezuelan

Table 5

C00NTMRIBUTI01 TO CH:SGIC IN ODP BY SECTCE5 IF ORIGOIN , 9J8-1962

(in billions of 1957 bolivares)

1958- 1959- 1960- 1961- IV 1960- 1962 IV 19611959 1960 1961 1962 1 1962 1-1 II-111 III-IV 1V 2962

Total GDP 1.52 0.29 0.39 1,52 0.29 0.13 -0,03 0.08 0oÄ2

Fxport Sector 0.45 0.19 -0.01 0.61 0.10 0.01 o.o4 -0.o4 0.11

Petroleum 0. 41 0.14 0.12 0.63 0.10 0.01 0.05 -0.05 0.11

DuurbLJ.e Goods -n.12 -. 6 -. '1.7 n.2 nA ·n.1 .n7 - ni,n u ~~~~ n e- nn n'in i l '

Uons tut.uLn -UJ6 --. 2-) -u.23 uvv07 -V.01 9. 0.62-.L

Manufacturing 0.14 -0.15 0,0l 0.08 002 0.02 -0.01 - 0.03Trade -0.10 -021 -<01 0,12 -0.01 - -0.01 0.u3 u.k

Non-Durable Goods 1.26 0.73 0.60 0.62 0.20 0.05 -0.08 0.09 02

M'^anufacturing 0.27 0.03 0.10 0.14 0.06 -0.01 -0.04 0.01 2Public Services 0.16 0.17 0.33 0.01 -0.01 0M01 - 0.02 0.02Other 0M82 0.53 0.17 .47 0.14 0.05 -0.03 0.05 0<2D

Totals may not add due to rounding,

Source: Central Bank of Venezuela.

Table 6

REAL GROSI INCOE 1 1958-1962

(in billions of bolivares)

1958 1959 1960 1961 1962

GNP Origint-in,; .in JI~ leto (r,~ i u L] II_ i.LUt_-0 C_~

11agest; andi ' 1r-t; U.}u UaY!4 -L.uu J.UU il.ul

Taxes (Accrued) 2.94 2.72 2.63 282 3.15Depreciatiun Alowance 0o8 voyl U.95 u,y3 uayt

Tt0al a,oo h.co u.5o i7. (I) y

Real Gross income (1957 Prices)

GNP Originating in Oil Sector / 1*T3 h.69 h.50 h.TO h.59GDP Originating in Non-oil Sector 4/ 17.26 18 43 18.58 18.85 19.72

Total 21.99 23.12 23.16 23.55 2-.63

Annual Percentage Change 5.1 0.2 1.7 4.6

1/ Combines GDP originatin7 in non-oil sector with contribution of oilsector to GNP and measures gross income available for use in Venezuela.See Table S.5 of Survey Mission Report.

2 Derived from Table 13.

3/ GNP originating in oil sector at current prices deflated by UN priceindex for manufactured goods exnorted from the US, Canada and WesternEurope (UN Monthly Bulletin of Statistics, March 1963). See notes toTables S.3 and S.5 of Survey 1ission Report.

h/ Derived from Table 3.

Sources: Central Bank of Venezuela and Ministry of Mines and Hydrocarbons.

Table 7

INDEXES OF INDUSTRIAL ACTIVITY!' 1957-1962(1953 = lO00

Annual

1957 1958 1959 1960 1961 1962 1961 1962

Manufacturing Industries

Food Processing 156.0 159.7 184.7 201.3 213.9 232.7 +6.3 +8,Beverages 131.7 165.0 191.9 206.6 200.1 203.7 -3.1 +1.8Tobacco 125.5 137.3 153.6 239.0 260.3 279.7 +8.9 +7.Textiles 176.8 193.3 238.0 268.8 283.5 341.1 +5.5 +20.1Leather 187.2 203.6 246.9 214.5 301.0 266.3 +40.3 -11.5Rubber 225.0 256.7 309.3 324.6 324.3 375.4 -0.1 +15,8Chemicals 183.6 202.1 228.4 218.0 237.6 306.3 +8.9 +28,9?Oil Products 166.7 180.6 200.7 203.6 220.9 344.5 +8.5 +10.INon-Metallic Minerals 172.1 154.4 172.7 143.7 145.0 146.1 +0.9 +0Vehicles (Assembly and Repair)140.9 163.4 200.6 174.2 179.5 178.9 +3.0 -0..3

Total Production 166.7 181.2 212.3 216.6 226.6 246.3 +4.6 +8.?

1/ Value Added.

Source: Central Bank of Venezuela.

Table 8

GROSS DOMESTIC INVESTMENT, 1958-1962

(in billions of 1957 bolivares)

OuarterlyAverage 1962

1958 1959 1960 1961 1962 1961 I II III IV

Gross DomesticProduet 2. 32 25.90 26.19 26.58 28.10 6.65 6.92 7.05 7.02 7.30

,xr-oss Dome-srtn-icCapital Formation 6c31 6.34 4.32 3.83 4.41 0.96 1.05 1.27 1.62 1,06

As 1. of -D124,6% 1 -1% 16. 16, 15i 1c -5i 15c

16'i;xed rapit 4alInvestment 6.10 6.07 h.70 3.80 3.93 0.95 0.89 0.98 0.95 1,12

(lonstructio (376)(3. n9)(3.00)(2 . n )(2.6 ý 1)( n.60)(-N.55)(0.65)(C.6n)(0.73

M,achinery andEqui pnent (3( 7 )1 )( ) ( ( (2 3

uuhanges inIne-ories 0.21 0,27 -0,38 0,03 0.48 0.01 0.17 0,30 0,08 -.0,06

Totals may not add due to Rounding.

Source: Central Bank of Venezuela.

Table 9

tIqlTTITYNl CSC,T-rCIN(Value of construction,in billio~ns of lvrs

1957 prices)

Annual Changes (%)Total Private Public Total Private Public

1957 3.84 1.9h 1.90 -9 .9 r.' -2.9 - n. - 7

1959 h.12 1.97 2.15 +10.5 +2.6 +18.8i- 196 3.60 18 1.76 - 1. -5. -1o.1961 2.69 1.38 1.31 -28.8 -31.2 -26.11962 2.90 1.81 1.09 +7.8 +31.2 -16.8

Source: Central Bank of Venezuela.

Table 10

PRICE IOVE'EUTS, 1950-1962'Indices 195'-1957 100)

1958 1959 1960 1961 1962

wrolesale Prices 101.0 1U4- U5-3 . LUO.9 112.1

Domestic Products 102.4 106.1 105.2 106.3 106.1

II .- LU L Z .L - ---Agricultural products -I 8.~ 114. -)11.1 -)1-1R/ I -I -7/Processed foods 101.5 106.1 102.2 101.51 103.8-1~~~ ~ ~ ~ -411- -1e -()A - (1 1 1c 1) '1 17 lL eIS,U.L-Le -LU..Lo) _ -L'J-J. L -L* L C

Construction materials 99.2 100.2 100.1 9471/ 99.L/

Imported Products 101.1 102.8 104.8 107.6 119.3

Processed foods 99.6 99.9 99.7 1/ 1/letls1fM -1r 1Ac I

Machinery and Equipment 104.6 106.8 107.8

Cost of Living (Caracas)(1958 = 100) 100.0 1.05.0 109.0 106.0 105.0

1/ No breakdown between domestic and imported goods available.

Sources: Central Bank of Venezuela (Wholesale Prices).U.N.: Monthly Bulletin of Statistics (Cost of Living).

Table 11

MONETARY SURVE1, 1960-1963(in millions of boiivares

(end of period) I (change 1/ (% changel/Uuring Uuringperiod) period)

Assets

Foreign Reserves (net) 1,879 1,818 1,798 1,835 -61 -20 -3 -1Credit to the Governnent (net) 322 541 208 239 219 -333 co -.2Credit to Private Sector 4,155 4,181 4,428 4,470 26 247 1 6Other (net) 79 -32 217 139 -111 249 200 -121

Liabilities

Money 3,539 3,603 3,550 3,419 64 -53 2 -1Time and Saving;s Deposits 1,667 1,638 1,804 1,967 -29 166 -2 10Obher 1,229 1,267 1,297 1,297 38 30 3 2

Total Assets/Liabilities 6,435 6,508 6,651 6,683 73 143

1/ No sign indicates increase; minus sign indicates decrease.

Source: Central Bank of Venezuela and I.M.F.

Table 12

nunnh nY PTRFORMAN,~CT.19'9-1963(in millions of bo1ivaresT

1959- 1960-1960 1961 1962 1963

Rev.Budget

Current Revenues 5,093 5,484 5,905 6,259

Petroleum (including Royalties) 2,850 3,138 3,102 3,413Other income Taxes u70 7 - oI L

Exchange Profits 419 489 974 1,120Customs Duties 04-161 ol 2 33Other Indirect Taxes 713 655 736 756

Current Expenditures -3,572 -3,693 -3,604 -4,017

Salaries 1,785 2,017 1,853 2,078Goods and Servicesl/ 608 4 41.>3 joTransfers 479 520 541 712States and .iunicipalities 700 712 757 864

Central Government Savings 1,521 1,791 2,301 2,242

Investment -1,833 -2,014 -1,862 -1,837

Direct 1/ 777 92> 1,0o 1LO,Indirec" 1,056 1,089 781 670

Adjustment to cash basis 1/ -36 78 189 -130

Central Govt Cash Surplus or Deficit (-) -348 -145 628 275

Financing (net) 348 165 -628 -275

Domestic Borrowing -740 4O -290 -355Central Bank (-) (106) (56) (n/a)Commercial Banks (-) (191) (-74) (n/a)Other (-740)2/ (-257)2/ (-272)3/ (n/a)

External Borrowing 467 200 -46 -122Changes in Bank Deposits (inc. -) 621 -95 -361 208Other - - 69 -6

1/ Changes in budgetary balances (carry out - carry in of unpaid bills) havebeen pro rated between "Goods and Service'" and "Direct Investment" on thebasis of cash payaments during fiscal year.

91/ Payi ment on det cotace before Janar 23, 19M8

;/ Payments on bonds. mainly to oil comoanies.

SOurce ,in,sEfy of Finance.

Table 13

INCOAL. COSTS AND NET PROFIT OF OIL COIPANIES. 19$$-1962

(in millions of bolivares)

1955 1956 1957 1958 1959 1960 1961 1962 1/

Income

Sales abroad 5,.91 6,3h9 7.865 7,069 6,608 6,606 6,806 7,03Sales in Venezuela 265 327 416 415 h70 h84 -78 528Other 117 153 183 176 206 180 185 186

Total 5,874 6,829 8,964 7,660 7,284 7,270 7,h69 7,757

Costs

Wages and Salaries 7), 775 778 900 939 998 1.001 866Other Costs 966 1,079 1,322 1,370 1,347 1,41l 1,238 1,150Denreciation 680 732 812 836 939 9),8 929 969

Total Costs 2,391 2,586 2,912 3,106 3,225 3.359 3,168 2,985

Rovalties 1,016 1,179 1,525 1,380 1,h2L 1,92 1.537 1,682Provision for inc.tax 689 870 1,164 1,480 1,219 1,089 1,229 1,419Other taxes 69 79 88 78 51 50 8 50

Total Taxes 1,77), 2,128 2,777 2,938 2,72) 2,631 2,82), 3,j1

Net Profit 1,710 2,11$ 2,77h 1,616 1,3' 19282 1),77 1,621

Net return on capital(5) 25.4 29.3 32.3 17.0 13.1 12.1 14.5 16.8

i/ Preliminary estimates.

Source: ilinis try of Mines and Hydrocarbons.

Table 14

E4LINCE OF AF RENTLiqw96-19,62

1960 1961 19621/

Not receipts from 1 companies- 1,1 1,2 1,

Other Goods and Services'/Exports FOB 217 176 162Imoorts FUB -1,053 -1,0 -2oA

Services (net)3/ -390 -370 -382Total -1,226 -1,215 -1,185

Balance 286 310 33Z

Private Canital 'Movements2f(incl. net errors and omissions) -448 -247 -259

Central Government Transfer-Payments and Canital -147 -82 -4

Mnnetary__AovementsTreasury Bills - 7 -5US Loans ($200 mill. US Commercial Banks;

$ 75 mill. Eximbank) 200 -8 -17I.M.F. -34 - -

Monetary Gold and other net foreign assets (inc.-) 193 20 3

iota! . tj--I L

Balance on long and snort-term capitai accounut

1/ Preliminary,2/ Including oil company capital3/ Including private transfer payments.4/ Excluding oil company capital,

Source: Central Bank of Venezuela and !.M.F.