VenEconomy: For those who think that the government is under the obligation to be transparent and keep the people it governs informed of its state policies and planning, the 2010 Budget is a true slap in the face.

The 2010 Budget Law, just passed following its first debate by the National Assembly on October 27, contains a number of points worthy of comment for their irrationality and because it will put the country in an extremely tight spot. Even with the scant information leaked so far, it is clear to analysts that the government's policies are contradictory and that the 2010 Budget is based on false premises.

One of those false budgetary premises is that inflation has been calculated at no more than 22% in 2010, when all forecasts put it at between 30% and 40%.

• Another false premise is that the economy will post slight growth in 2010, even though a contraction is what is actually expected.

The biggest absurdity is that fiscal spending in 2010 will be Bs.f 159 billion. But the fact of the matter is that, if this figure is adjusted for expected inflation, spending for next year will be 40% less than currently projected.

In other words, the government is brazenly proposing spending 40% less in 2010 without showing the slightest awareness of the blow that this will mean for the economy, much less any sign that it is thinking of implementing adjustment policies to cope with the dramatic situation that is just around the corner. This suggests that, in 2010, the government is considering implementing, quite blatantly, the same policy it adopted in 2009: heavy borrowing and starting up the inorganic money-making machine.

Perhaps the Chavez administration's managers of matters economic think that oil revenues and the policy of more borrowing will be sufficient to bridge the 40% gap in fiscal spending or even that revenues will be greater in real terms. But any objective analysis shows that it is impossible to maintain this rate of spending for another year.

It is true that the average price of oil at $40/bbl is underestimated, but it is equally true that the production figure of 3.13 billion barrels a day is overestimated. If price and volume were adjusted to more realistic figures, there are grounds for thinking that oil revenues are underestimated by $6.5 billion, provided Cuba pays its oil bills on time. Those $6.5 billion at Bs.f 2.15:$ would give Bs.f 14 billion in additional revenue, which would not manage to bridge the 40% gap mentioned earlier by a long chalk.

If to this scenario we then add the latest issue of petro bonds, which was given a poor reception, it is clear that the possibilities of bridging the fiscal gap with more borrowing are bound to drift further and further out of reach. By way of example, the latest petro bond is being traded to yield 19%, whereas the bonds of the state-owned oil companies of Brazil, Trinidad, and Kazakhstan are yielding 6%.

All this would explain the amendments that are being made to the Central Bank Law, with the idea of bleeding the Central Bank.

But not even with that extraordinary money-making machine into which they are turning the Central Bank will they be able to save the country from the monumental jam of galloping inflation and economic contraction that is in the making.

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