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Venezuela's Oil Income Funds Health, Education, Feeding

Venezuela is likely to increase government spending due to record oil income

Venezuela is likely to increase government spending 32 percent next year from the initial 2006 budget as record oil income funds health, education and food programs.

The 2007 budget plan, presented the National Assembly by Finance Minister Nelson Merentes this afternoon, calls for 115 trillion bolivars ($54 billion) in spending, up from 87 trillion bolivars allocated in 2006.

Next year's budget is based on the price of Venezuelan oil averaging $29 a barrel, up from $26 in this year's budget. The country's oil has averaged $57.89 a barrel so far in 2006, allowing congress to approve 30 trillion bolivars of additional spending this year. The government receives about half its income from the oil industry.

The conservative forecast for next year's price of oil may pave the way for even more additional spending in 2007, said Alberto Ramos, a senior Latin America economist with Goldman Sachs Group Inc. in New York.