A few weeks ago, Anabella and I were looking through some long-forgotten bits of Venezuela’s 1999 Constitution: the bits on public sector financial management.

Bercia, chama,” I said, “have you looked at Article 315 lately!? It reads like a García Banchs OpEd!”

De pana,” she shot back. “But not just that one…that whole section of the constitution reads like a CEDICE pamphlet now: Central Bank autonomy, inflation targetting, primary fiscal balance over the business cycle, I mean, cripes, even the mandate that the President has to submit the budget to the Asamblea for approval!”

Sí, sí, es que es todo,” I said, “every sentence there reads like counterrevolutionary propaganda now…”

Right then, an idea was born.

“We should totally do it,” she said.

“Do what?”

“Write it up,” she said, getting impatient. “Just literally gloss the constitution’s Articles 311-321 as though they were a call for radical reform and run it. I bet nobody would spot it.”

And so…that’s exactly what we did.

Every single point in our “Seven Point Plan for Prosperity” is already in the constitution.

Y’know, the one that’s theoretically in force now. Obvs, none of them are followed ni nada que se le parezca. But our call for radical neoliberal reform? It’s all cribbed straight out of Chávez’s constitution.

And Anabella was right. Nobody spotted it.

There’s a lesson here beyond the nerdy in-joke. It’s not even about the way it lays bare our galloping ignorance of what the constitution actually says. Instead, it’s a hopeful lesson about the future.

We sometimes fret that the legal basis for proper governance will be terribly difficult to establish after transition. But that’s BS. At least in terms of a sane framework for public sector financial management, there’s absolutely zero need to amend or reform the constitution. Instead we need a far more radical reform, the kind that’s never been seriously tried before. We need to do what the damn constitution says. That’s all.


Caracas Chronicles is 100% reader-supported. Support independent Venezuelan journalism by making a donation.


  1. So you do believe in the possibility of independent economic institutions! That’s great man! I thought that in order to eliminate the chance monetary and fiscal policy capture you were going to advocate for a dollarized economy and a State the size of those seen in Libertarian dreams.

      • Garcia Banchs is actually far from anything you could call neoliberal.

        The guy basically follows Joan Robinson-and-Minsky-like post-keynesians on macro topics.

        He doesn’t even consider the role of expectations on monetary or fiscal policy

  2. Chavez, thanks mainly to Miquilena, promised very effective correctives to Venezuela’s ailing economy at the time, and thereby captured an important part of the then middle-class vote. But, at heart, he was an Adan Chavez-influenced Castro Communist, as he soon jettisoned Miquelena, and rode the unusual 10-fold+ oil price boom to a populist/corrupt orgy ending in the rape/ruin of a once well-off country.

  3. That’s the most sophisticated , clever , meanest dia de los inocentes trick ever played , Kudos to you both for playing it ……… The constitution has many great provisions but maybe the language can be tighter and more specific , the general principles are fine, problem with many of these provisions is that to they cannot be directly implemented unless they are ‘developed’ through implementing laws , they are what lawyers called programatic provisions , they depend on a law being ennacted to state how in practice they are to be applied and thats were the trick is played on all of us, because the laws can develop the principle in ways that leave gaps through which the principle is weakened or even virtually abolished …. the sometimes shoddy language of the constitution sometimes makes this ‘gaming’ of constitutional principles possible and even easy ….

    An example , Constitutionally all public indebtedness is subject to congressional approval , in actual fact the organic law which regulates public financial operations allows for quite a few exceptions from this principle …..!!

    The law is that where a programatic constitutional provision requires a law for it to be implemented then the provision is held in abeyance until the law is ennacted, there is a ‘catch all law’ which allows again in principle for certain programatic provisions to be implemented directly , there are many constitutional provisions where lawyers and pols have a field day ‘interpreting’ it in ways that make its implementation a joke or a game of wits….!!

    On the other hand this regime has made the constitution practically a football ball which can be kicked to and fro and handled as a soap bubble…so that it is no longer of any relevance for the conduct of political affairs ….!!

    Putting a bit more iron into the constitution might be one of the first tasks to be undertaken ‘come the revolution ‘ ( the real one I mean ) ……….make that into your seventh point…!!

  4. It would be fun if the opposition presented those seven points as its future government plan, and then when chavistas said this was part of a neoliberal fascist agenda, play the same joke and say: “Hey! Read the constitution!”.

  5. That was scary.

    There’s a lot of talk about how socialism in the Cuban style destroyed Venezuela but although socialism has destroyed many countries, including Cuba, the manner in which chavismo destroyed Venezuela is different in many critical apects, the constitution being one of them. This is not a socialist constitution. In fact, it lacks some collectivist thinking found in most capitalist systems. For example, the first thing that struck me from the ‘7 point plan’ was the absence of any express role for the central bank in promoting employment. Luckily I held my tongue on that one…

    Lesson here of course is there is no magic in the words on the page or institutions with certain names if there is not a broad consensus as to what those words mean and how those institutions should behave. And much of those understandings and practices are not codified. You can run a dictatorship through a liberal constitutional model, and maintain much and perhaps most of the outward forms of that model. Ok, the TSJ is increasingly producing wild science fiction material, but it doesn’t have to. It could accomplish the same objectives -the same abuses- in bland, opaque prose, I’m sure.

    As many are asking, how do you rebuild the consensus that gave expression to that liberal model in the first place. Who will man the barricades for AN budget oversight?

    So we are innocent and guilty at the same time.

  6. A Constitution is only as good as the people whose job it is to interpret and apply its provisions , the best constitution can be made a bad constitution by the manner of its interpretation (or misinterpretation) and application , Never put your faith in peoples written words , only on peoples character , attitudes and behaviour…!!

    • And that, dear Bill, is really Venezuela’s main problem, historically, now, and in the future, For the very small fraction of 1% of Venezuela’s total population that comments/writes intelligently on this Blog and elsewhere, we have 99.99% of the population who no from nothing, could care less, or are more than willing to subvert the best of development intentions, even assuming Chavismo/populismo were to drop dead or roll over politically in the future (probably not in the cards)….

  7. Juat in case you were wondering, the relevant articles:

    Chapter II
    Tax and Monetary System

    Section One: Budget System

    Article 311: Fiscal Policy shall be governed and implemented on principles of efficiency, solvency,
    transparency, responsibility and fiscal balance. Fiscal Policy is to be balanced over a multiyear
    budget framework, in such manner that ordinary revenues shall be sufficient to cover ordinary
    expenses. The National Executive shall submit for enactment by the National Assembly a multiyear
    framework for budgeting that establishes the maximum limits of expenditures and indebtedness
    to be contemplated in national budgets. The characteristics of this framework, the requirements
    for modifying the same and the terms for carrying out the same shall be established by law. Any
    revenues generated by exploiting underground wealth and minerals, in general, shall be used to
    finance real productive investment, education and health. The principles and provisions established
    for national economic and financial management shall also govern that of the States and
    Municipalities, to the extent applicable.

    Article 312: Public debt limits shall be set by law in accordance with a prudent level in terms of
    the size of the economy, reproductive investment and the ability to generate revenues to cover
    public debt service. In order to be valid, public credit transactions shall require a special
    law authorizing them, with the exceptions established under the pertinent organic law. The
    special law shall indicate the modalities of the transactions and authorize the appropriate budget
    credits in the pertinent budget law. The annual special indebtedness law shall be submitted to the
    National Assembly together with the budget law. The State shall not recognize any obligations other
    than those assumed by lawful National Authority organs in accordance with law.

    Article 313: The economic and financial management of the State shall be governed by a budget
    approved annually by law. The National Executive shall submit the draft Budget Act to the National
    Assembly, at the time prescribed by the organic act. If the Executive Power fails for any reason to
    submit the budget bill within the time limit established by law, or the bill is rejected, the
    budget for the current fiscal year shall remain in effect. The National Assembly shall have the
    power to alter budget items, but shall not authorize measures leading to a decrease in public
    revenues or to expenses exceeding the estimated revenue amounts in the budget bill. In submitting
    the multiyear budget framework, the special indebtedness law and the annual budget, the National
    Executive Branch shall explicitly state the long-term objectives of fiscal Policy and explain how
    these objectives are to be achieved, in accordance with principles of responsibility and a fiscal

    Article 314: No expense of any kind shall be disbursed unless the same has been
    provided for in the budget law. Additional budget credit items may be ordered to cover essential
    unforeseen expenses or items that had not been adequately funded, only if the treasury has
    resources to cover the expenditure concerned; this shall be done only following a vote in favor by
    the Cabinet of Ministers and authorization by the National Assembly, or in its absence, by the
    Delegated Committee.

    Article 315: In the annual public expense budgets at all levels of government, the
    specific objective to which each credit item in the budget is addressed shall be clearly
    established, as well as the concrete results expected and the public officials responsible for
    achieving these results. The latter shall be established in quantitative terms, by means of
    performance indicators, where this is technically possible. The Executive Power shall submit to the
    National Assembly within six months of the close of the fiscal year the annual accounting and
    budget implementation balance sheet for such fiscal year.

    Section Two: Taxation System

    Article 316: The taxation system shall seek a fair distribution of public burdens in accordance
    with the taxpayer’s ability to pay, taking into account the principle of progressive taxation, as
    well as protection of the national economy and raising the standard of living of the population,
    the foundation therefore being an efficient system for the collection of taxes.

    Article 317: No tax, assessment or contribution of any kind shall be collected unless it is
    established by law, and no exemptions, abatements or other types of tax incentives shall be granted
    except as provided for by law. No tax shall have a confiscatory effect. No tax obligations payable
    in personal services shall be established. Tax evasion may be punished as a criminal
    offense, without prejudice to other penalties established by law. In case of officials* they shall
    be punished double. Every tax law shall specify the interval that is to lapse before it goes into
    effect. In the absence of such provision, the period shall be understood as being 60 calendar
    days. This provision shall not restrict the extraordinary powers to be granted by the
    National Executive in the cases provided for by this Constitution. The national tax administration
    shall enjoy technical, operating and financial autonomy in accordance with legislation approved by
    the National Assembly, and its maximum authority shall be designated by the President* of the
    Republic, in accordance with the rules laid down in the pertinent law.

    Section Three: National Monetary System

    Article 318: The monetary competence of National Authority shall necessarily be exercised
    exclusively by the Venezuelan Central Bank. The fundamental objective of the Venezuelan Central
    Bank is to achieve price stability and preserve the internal and foreign exchange value of the
    monetary unit. The monetary unit of the Bolivarian Republic of Venezuela is the Bolivar. In the
    event a common currency is instituted within the framework of Latin American and Caribbean
    integration, it shall be permissible to adopt the currency provided for by a treaty signed by the
    Republic. The Venezuelan

    Central Bank is a public-law juridical person with autonomy to formulate and implement policies
    within its sphere of competence. The Venezuelan Central Bank shall perform its functions in
    coordination with general economic policy, in the interest of attaining the higher objectives of
    the State and the Nation. In order to provide for the adequate attainment of its objective, the
    functions of the Venezuelan Central Bank shall include those of formulating and implementing
    monetary policy, participating in the design of and implementing foreign exchange policy, currency
    regulation, credit and interest rate, administrating international reserves and any others
    established by law.

    Article 319: The Venezuelan Central Bank shall be governed by the principle of public
    responsibility, to which end it shall render an accounting of its actions, goals and the results of
    its policies to the National Assembly, in accordance with law. It shall also issue periodic reports
    on the behavior of the country’s macroeconomic variables and on any other matters concerning which
    reports may be requested, including sufficient analysis to permit its evaluation. Failure to meet
    the objective and goals, without justifiable cause shall result in removal of the Board of
    Directors and imposition of administrative penalties, in accordance with law. The Venezuelan
    Central Bank shall be subject to oversight after the fact by the Office of the General Comptroller
    of the Republic and inspection and supervision by the public entity that supervises banking, which
    shall send to the National Assembly reports on the inspections it conducts. The budget of operating
    expenses of the Venezuelan Central Bank shall require discussion and approval by the National
    Assembly, and its accounts and balance sheets shall be subjected to independent audits on such
    terms as may be established by law.

    Section Four: Macroeconomic Coordination

    Article 320: The State shall promote and defend economic stability, prevent the vulnerability of
    the economy and see to monetary and price stability, in order to ensure the welfare of society. The
    ministry responsible for finance and the Venezuelan Central Bank shall contribute to the harmony
    between fiscal and monetary policy, thereby facilitating the attainment of macroeconomic
    objectives. In performing its functions, the Central Bank of Venezuela shall not be subject to
    directives from the National Executive and shall not be permitted to endorse or finance deficit
    fiscal policies. The coordinated actions of the National Executive and the Venezuelan Central Bank
    shall be achieved through an annual policy agreement which shall establish the final growth
    objectives and their repercussion on society, the external balance of payments and inflation, as
    regards fiscal, foreign exchange and monetary policy; as well as the levels of intermediate and
    instrumental variables required in order to achieve the aforementioned final objectives. This
    agreement shall be signed by the President* of the Venezuelan Central Bank and the head of the
    ministry responsible for finance, and shall be made public at the time of approval of the budget by
    the National Assembly. It is the responsibility of the signers of the agreement to see that policy
    actions are consistent with the objectives. The aforementioned agreement shall specify the results
    expected and the policies and actions designed to achieve the same. The characteristics of the
    annual economic policy agreement and the mechanisms for submitting an accounting shall be
    established by law.

    Article 321: A macroeconomic stabilization fund shall be established by law for the
    purpose of guaranteeing the stability of the State’s expenses at the national, regional and
    municipal levels, in the face of fluctuations in ordinary revenues. The operating rules for this
    fund shall observe the basic principles of efficiency, fairness and nondiscrimination as between
    the public organs contributing resources to the fund.


Please enter your comment!
Please enter your name here