Venezuela’s Vice President, Delcy Rodriguez, made an important announcement on Tuesday, outlining the government’s ambitious $22.7 billion budget for fiscal year 2025.

This proposal represents an almost 11% increase from the current year’s budget of $20.5 billion.

This increase in budget allocation is especially noteworthy given the country’s continuous economic uncertainty, which has been compounded by the broad sanctions imposed by the United States, which have had a significant impact on many sectors.

During her speech to the government-allied National Assembly, Rodriguez voiced optimism about Venezuela’s economic prospects for the following year.

“2025 will be a better year because we have learned to manage the difficulties,” Rodriguez said, emphasizing the administration’s determination to navigate the long-running crises that have characterized Venezuela’s economic landscape in recent years.

This announcement comes at a time when Venezuela is in deep political crisis following the results of the July 28 elections, which Maduro claims won with more than 56% of the vote, while the opposition denounced fraud and claimed victory for its leader, Edmundo González.

The decline in oil revenues signals challenges ahead

Despite Rodriguez’s assurances of future improvements, the recently released budget proposal has exposed troubling tendencies, particularly about the country’s principal source of revenue: the state-run oil corporation Petroleos de Venezuela S.A.

According to the budget draft accessed by Reuters, PDVSA contributions are expected to fall by 14.6% in 2025, totalling around $10.1 billion, or 53% of total government spending demands.

This worrisome trend represents a considerable decline from the oil company’s $11.9 billion contribution in 2024, prompting concerns among economists about the budget’s overall viability.

The predicted decline in PDVSA revenues poses a significant obstacle to the government’s ambitious financial objectives.

While PDVSA has not yet provided any immediate comment on the forecasts outlined in the proposed budget, market analysts have long warned of the consequences of continued oil sector instability and decline, warning that such factors could jeopardize the country’s financial health.

The repercussions of this decline go beyond economic problems, as it jeopardizes the government’s ability to effectively support vital social programs and infrastructural improvements required for national recovery.

Tax revenues and alternative funding sources

In an effort to close the estimated fiscal imbalance, the Venezuelan government expects tax collections to contribute $5.25 billion, or around 28% of the overall proposed budget.

In addition, the government intends to investigate additional revenue streams, such as those provided by mining activities, as well as seek loans and other kinds of debt issues to strengthen its financial position in the face of these difficult conditions.

However, it is worth noting that the budget proposal lacks particular information about the expected rates of economic growth and inflation for the coming year.

This omission has raised concerns among economic specialists about the viability and realism of the budget’s ambitious ambitions.

The Venezuelan economy has seen a catastrophic slump in recent years, exacerbated by hyperinflation and the widespread effects of rigorous international sanctions.

In reaction to the crisis, President Nicolas Maduro’s administration has adopted more conventional economic measures.

These measures have included credit restrictions, reduced state spending, and the establishment of a fixed exchange rate between the bolivar and the dollar.

Collectively, these policies try to stabilize consumer prices while restoring some fiscal balance to the national economy.

Inflation control vs. floating currency risks

President Maduro has publicly claimed success in the ongoing struggle against inflation, claiming that rates that had previously risen at an incredible 100,000% had now stabilized, with prices in 2024 equivalent to those in 2014.

Nonetheless, this assumption is met with suspicion, particularly in light of recent statistics showing a recovery in prices.

This inflationary pressure comes after the government’s contentious decision to allow the bolivar currency to float starting in mid-October.

This transition triggered a period of currency decline, with the bolivar’s exchange rate reaching about 45 to the dollar, according to current central bank estimates.

As the Venezuelan government moves on with its ambitious budget plans for 2025, the road ahead is littered with difficulties.

Policymakers must navigate the challenges of a shrinking oil sector while also dealing with the consequences of excessive inflation and currency volatility, which might jeopardize any recovery attempts.

The effectiveness and execution of this budget will be closely scrutinized by both domestic and international observers, as many are left wondering whether this ambitious proposal will actually lay the groundwork for a more stable economic environment, or if it will simply exacerbate the country’s current problems.

A test of economic resilience

Finally, the planned budget for the coming year, 2025, is a critical test of Venezuela’s economic endurance as the country works to overcome an extremely volatile economic landscape.

With a renewed emphasis on fiscal management and a commitment to responsible governance, the goals outlined in this budget proposal will necessitate coordinated and concerted efforts to stabilize the national economy and rebuild trust among both citizens and the international community.

The following year will be critical in determining whether Venezuela can successfully improve its economic and political prospects and avoid the trappings of a prolonged crisis, or if it will remain trapped in an endless cycle of poverty and instability.

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France’s political landscape was thrown into disarray as Michel Barnier’s government, which lasted just three months, collapsed after a dramatic no-confidence vote in the National Assembly.

At the heart of this unprecedented downfall were controversial budget proposals for 2025, designed to tackle France’s mounting fiscal challenges but met with fierce resistance across the political spectrum.

Proposed budget triggered Barnier’s fall

Michel Barnier, a seasoned conservative and former EU Brexit negotiator, introduced a budget plan aimed at slashing France’s deficit.

His proposal sought to reduce the deficit from 6.1% of GDP in 2024 to 5% in 2025 through €60 billion in tax hikes and spending cuts.

While intended to stabilize France’s finances, the austerity measures sparked widespread backlash, with opposition leaders accusing Barnier of being out of touch with voters grappling with economic hardship.

Barnier’s government faced additional criticism for using special constitutional powers to push through parts of the budget without full parliamentary approval, further alienating lawmakers.

The culmination of discontent came when 331 legislators voted in favor of the no-confidence motion, sealing Barnier’s fate and marking the shortest tenure for a French prime minister since the establishment of the Fifth Republic in 1958.

A no-confidence vote is a parliamentary tool used to challenge a government’s legitimacy.

If a majority of lawmakers support the motion, the government is forced to resign.

In Barnier’s case, the vote not only ended his tenure but also plunged France into a period of uncertainty as the search for a new leader began.

Divisions within France’s political landscape

Barnier’s ousting has exposed deep divisions within France’s political landscape.

President Emmanuel Macron now faces the daunting task of navigating a fragmented National Assembly where his centrist coalition no longer commands a majority.

The opposition is dominated by Marine Le Pen’s National Rally and a coalition of left-wing parties, both of which united against Barnier’s budget.

Le Pen has seized the political moment, calling for Macron’s resignation and positioning herself as a frontrunner for the next presidential election.

While she opposed Barnier’s fiscal plan, she has indicated a willingness to collaborate with any future government aligned with her party’s economic priorities.

Political instability in Paris risks undermining investor confidence

The collapse of Barnier’s government comes at a critical time for France, the EU’s second-largest economy.

Political instability in Paris risks undermining investor confidence, with French bond futures already slipping after the vote.

Barnier himself had warned of market turbulence in the event of his ousting, a prediction that now looms large over France’s economic outlook.

For Macron, the challenge extends beyond selecting a new prime minister.

He must also secure parliamentary backing for a 2025 budget amid mounting pressure to avoid a government shutdown.

Finance Minister Antoine Armand has cautioned that failure to pass a budget could lead to emergency tax hikes and spending cuts, further straining public sentiment.

The caretaker government will function temporarily, but its ability to enact critical reforms is severely limited.

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The Federal Reserve’s latest Beige Book, a compilation of anecdotal economic data from across the country, paints a picture of modest growth with persistent inflationary pressures.

Released on Wednesday, the report summarizes observations gathered through November 22nd from the Fed’s twelve regional banks.

While economic activity has expanded slightly since early October in most regions, the report highlights a nuanced picture of the current economic climate.

‘Subdued’ employment growth, persistent inflation

The Beige Book notes that employment growth remains “subdued,” a key factor influencing the Fed’s policy decisions.

Inflation, while rising at a modest pace, continues to exceed the Fed’s 2% target.

The report cites the 12-month change in the personal consumption expenditures (PCE) price index (excluding food and energy) remaining stubbornly in the 2.6% to 2.8% range since May.

This figure, a key measure of underlying inflation, remains well above the Fed’s comfort zone.

Business optimism amidst uncertainty

Despite the persistent inflationary pressures and subdued employment growth, the Beige Book highlights a notable trend: “Business contacts expressed optimism that demand will rise in coming months.”

This positive sentiment suggests a degree of confidence among businesses regarding future economic prospects.

This optimistic outlook is expected to influence the Fed’s policy decisions moving forward.

What is Federal Reserve’s next move?

The Beige Book’s findings will significantly impact the Federal Reserve’s upcoming rate-setting meeting in two weeks.

Financial markets anticipate a quarter-percentage-point rate cut, despite inflation remaining higher than desired.

This expectation underscores the balancing act facing the Fed: mitigating inflationary risks while supporting continued economic growth.

The current policy rate sits within the 4.50%-4.75% range following reductions in September and November.

Labor market cools gradually, employment report anticipated

The report also acknowledges the ongoing cooling of the labor market, describing it as “gradually cooling” while remaining strong overall.

Economists anticipate the upcoming November jobs report (due Friday) to reveal a rebound in payroll growth after October’s disappointing figures, which were impacted by hurricanes and a strike at Boeing.

However, the unemployment rate is projected to rise slightly to 4.2% from 4.1%.

The report indirectly references the ongoing debate among Fed policymakers regarding the “neutral rate”—the level at which interest rates cease to significantly impact economic activity.

Most policymakers estimated this neutral rate to be no higher than 3.5% as of September.

The Fed is mindful of keeping the policy rate from remaining too far above this neutral level for an extended period, to avoid unnecessarily stifling economic growth.

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US equity benchmarks rose on Wednesday led by gains in technology shares such as Salesforce and Marvell Technology. 

At the time of writing, the Dow Jones Industrial Average was up 0.6%, while the S&P 500 gained 0.3%. The Nasdaq Composite rose 0.6%. 

Both the Nasdaq and the S&P 500 hit fresh record highs on Wednesday. 

All three benchmarks came off a mixed session from Tuesday as both the Nasdaq and S&P 500 had risen marginally, while the Dow Jones fell. 

Wall Street’s major averages have had a muted start to December compared with sharp gains last month. 

Most of last month’s gains were after the US President-elect Donald Trump won the 2024 election. 

“Overall, investor sentiment remains positive, although few are in any doubt that it will take more energy to drive up equity prices now given the outstanding performance in November,” David Morrison, senior market analyst at Trade Nation said. 

All the majors had their best month of the year, with the Dow, S&P and NASDAQ up 7, 5 and 4% respectively. 

He added:

A new Trump administration is viewed as being particularly bullish for domestic stocks due to promises of deregulation and a positive tax environment.

Meanwhile, a report by ADP on Wednesday showed that private payrolls grew less than expected in the US last month. 

A total of 146,000 new jobs were added in November, while analysts polled by Dow Jones had estimated the figure to come in at 163,000. 

Investors will now focus on the US non-farm payrolls data due to be released on Friday, which is the Federal Reserve’s preferred gauge for assessing the economy’s health. 

Additionally, the market will also monitor comments from the Fed Chair Jerome Powell later on Wednesday as he is scheduled to speak in New York. 

Salesforce and Marvell Technology jump

Shares of Salesforce soared on Wednesday after the company announced positive earnings results. 

Shares were up nearly 10% at the time of writing, as the company’s earnings beat analysts’ expectations, boosting hopes for its much-hyped artificial technology strategy. 

Meanwhile, Marvell Technology’s stock jumped nearly 20% on Wednesday after the chipmaker’s fourth-quarter revenue rose to $1.80 billion, beating expectations of $1.65 billion. 

Earlier this year, the company said it expected AI network and custom processor chip sales to hit $2.5 billion by 2026. CEO Matthew Murphy said on Tuesday’s earnings call that the forecast was overshooting. 

Chewy slides

Shares of pet supplies retailer Chewy slid more than 7% on Wednesday after the company posted disappointing third-quarter earnings results.

Chewy’s earnings for the third quarter came in at just 1 cent per share, while forecasts indicated 8 cents, according to analysts at LSEG.

The company’s revenue came in at $2.88 billion, which was in line with expectations. 

For both its fourth-quarter and full-year outlook, Chewy guided for revenues that were higher than FactSet consensus, according to a CNBC report.

Dollar Tree jumps

Shares of Dollar Tree rose more than 4% on Wednesday after the company posted positive earnings. 

During the third-quarter, the company earned $1.12 per share on $7.56 billion in revenue, above the $1.07 per share on $7.44 billion in revenue that analysts surveyed by LSEG were expecting. 

The company also said that CEO Jeff Davis will step down from his role. 

The company’s stock has fallen about 49% since the beginning of the year.  

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South Korean President Yoon Suk Yeol is on the brink of impeachment after his controversial decision to briefly impose martial law, marking a pivotal moment in the country’s political history.

The move has drawn widespread condemnation, triggered mass protests, and plunged the nation into political turmoil.

The crisis began when Yoon, in a late-night televised address, declared martial law for the first time in nearly 50 years.

He claimed it was necessary to “protect the constitutional order,” accusing opposition parties of undermining governance and sympathizing with North Korea.

Under the martial law decree, all political activities and protests were banned, the National Assembly’s operations were suspended, and the media was brought under strict control.

Striking doctors were also ordered to return to work within 48 hours.

The martial law declaration sparked immediate backlash.

Citizens, lawmakers, and unions decried the move as unconstitutional and authoritarian.

Members of Parliament rushed to convene in an emergency session, where they passed a resolution demanding an immediate repeal of martial law.

By the following day, Yoon rescinded the declaration, citing Parliament’s decision but criticized opposition parties for using impeachment and legislative tactics to paralyze his administration.

In response to these events, the Democratic Party of Korea (DPK), which holds a majority in Parliament, filed articles of impeachment against Yoon.

The DPK called the martial law declaration “unconstitutional and illegal” and argued that it represented a grave violation of the president’s duties.

The impeachment motion is set to be voted on in a plenary session, where the DPK and its allies, holding 192 out of 300 parliamentary seats, need just eight more votes to reach the two-thirds majority required for impeachment.

If Parliament approves the motion, the case will be forwarded to South Korea’s Constitutional Court.

The court will have up to 180 days to determine whether to uphold the impeachment.

During this time, Yoon’s presidential powers will be suspended, and an acting leader will take over.

If the court rules in favor of the impeachment, Yoon will be removed from office, triggering a new presidential election.

If Yoon resigns before the court’s ruling, the impeachment process will be nullified.

The fallout from this crisis has already shaken Yoon’s administration.

His chief of staff, senior secretaries, and Defense Minister Kim Yong-hyun have tendered their resignations.

Meanwhile, Yoon’s People Power Party is rallying to block the impeachment motion, arguing that his actions were constitutional and necessary to stabilize the government.

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