By Jeremy Morgan
Latin American Herald Tribune staff

CARACAS -- Warnings that Venezuela's crucial oil export earnings will inevitably slide next year and take the revenues available for state spending have gained weight with official confirmation that the price for the country's mix of medium-grade and heavy crude fell to $34.49 a barrel last week.

At the same time, it quietly emerged that steps might be afoot to cut the amount of funding included in the 2009 budget for President Hugo Chávez' raft of social welfare programs colloquially known as "missions." Until now, officials have insisted that social spending would be beyond the reach of the budgetary scalpel.

Oil prices are now well below the $60 a barrel assumed in the 2009 Budget Bill submitted by Finance Minister Alí Rodríguez Araque. The legislation is still meandering its way through committee and has yet to go to second debate, and already it's been hopelessly caught out by the times.

Ironically, Venezuelan oil is now selling for a little below the $36 a barrel that was written into the 2008 budget a year ago. At the time, the figure was regarded as little short of absurd given trends in world oil markets.

The reason why the figure was set so low was to leave an "excess" or "surplus" that the government (for which, read Chávez) would be free to spend outside the budget and beyond parliamentary scrutiny.

Compliant legislators nodded the budget through. This time, they're faced with a massive conundrum that nobody's seems to know how best to handle, the minister as much as anybody else. The National Assembly’s finance committee gave preliminary approval to the 2009 budget on Monday.

At least, say some economists, a ray of reality seems to be breaking through when it comes to spending on the missions. The official phraseology used by Rodríguez Araque is that the 2009 budget won't "guarantee" resources for these programs.

But the figures reveal that the missions stand to receive 19.7% less next year than they did this time round. This year's budget allocated BsF20.9 billion to social spending, of which BsF5.6 billion went straight to the missions.

At the same time, Richard Sanguino, Head of the Finance Committee, said that they have decided to wait until after the first quarter -- and after Chavez' proposed re-election amendment referendum, which is expected in late February.

“In the first quarter there’s no proposal for any changes” in the budget, Sanguino said. “It’s not going to be necessary to go for cuts.”

Sanguino also said they would wait to see how incoming President Barack Obama does fixing the US economy. He also felt that OPEC would begin to "stabilize" oil prices next week when they meet.

Meanwhile, Chavez also finally weighed in on the economy, saying that the country will face difficult years ahead as the world financial crisis expands and demand for oil, Venezuela’s principal export, wanes.

"The world is in crisis,” he said. “It hasn’t hit Venezuela yet, but we can’t say that a crisis of this magnitude,
depth and impact won’t affect us. The economy will go through difficult moments in coming years without a doubt. But Venezuela has what it takes to navigate through the storm.”

Venezuela is prepared to confront the crisis and should restrict spending to strictly necessary items while saving as much as possible, Chavez said.

But not, apparently, until after his referendum.