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VENEZUELA
More money, more poverty?
Andrés Cañizález, Elsa Piña
1/31/2008
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Consumption soars, but unequal distribution persists.

There is more money in the hands of the poorest Venezuelans, causing consumption to soar, but fundamental issues — such as a lack of shelter and other basic needs — are still far from being resolved.

Once President Hugo Chávez’s government took full control of the state oil company Petróleos de Venezuela (PDVSA) following a December 2002-January 2003 oil strike, the company’s priorities were rearranged.

According to their website, US$13 billion was pledged in 2006 to the nation’s social development. In fact, it is common to find announcements advertising that PDVSA will finance events ranging from children orchestras to food programs.

Luis Pedro España, head of the Poverty Project at the Andrés Bello Catholic University, says that thanks to the oil bonanza, the country is living an illusion, just as it did in the 1970s.

“There are people who consume more, but only because PDVSA has more income. When the oil market suffers a cold, we ourselves will die of pneumonia,” assured España in a recent interview.

Network against poverty
According to the government’s National Institute of Statistics, Venezuela has seen a spectacular reduction in poverty. Households living in poverty reduced from 54 percent in 2003 to 27 percent in 2007, while families in extreme poverty went from 25 percent to less than 8 percent.

David Velásquez, who was minister of Social Participation and Social Development until the beginning of this January, believes that government policies are responsible for the achievements.

“A network against poverty is developing. It is possible to reach the goal of Zero Misery [extreme poverty] in 2001 and Zero Poverty in 2021,” he remarked.

Furthermore, the Economic Commission for Latin America and the Caribbean gave Venezuela second place (after Argentina) as the country with the most successful policies for reducing poverty in 2007.

However, it is obvious for Mercedes Pulido, former minister of Social Development, that while Venezuelans have higher incomes, “basic problems continue without being resolved.”

“If income alone is measured, there is undoubtedly a positive change, but this does not resolve the structural problem of poverty. What we have, so to speak, are poor people with more money,” commented Luis Vicente León, director of Datanálisis, a market and politics research firm.

According to the Human Development Report 2007-2008 issued by the United Nations Development Program (UNDP), there is a serious situation of unequal distribution in Venezuela: the poorest 10 percent must share 0.7 percent of the country’s gross domestic product, while the richest 10 percent control 35.2 percent of the GDP.

For UNDP, a useful indicator for measuring income distribution is the Gini coefficient, which grew from 44.1 in 2006 to 48.2 in 2007 on a scale of zero (perfectly equal) to 100 (perfectly unequal).

The president of INE, Elías Eljuri, disregarded the UNDP report, which he branded as ridiculous.

Social emphasis
Following the defeat of the Dec. 2 referendum — when Venezuelans voted against the proposed constitutional reform presented by Chávez, which included indefinite presidential reelection — President Chávez announced that more emphasis should be placed on social problems.

Specifically, Chávez mentioned that his government should reinitiate some of the social programs he launched a year before the 2004 referendum, when it was decided whether Chávez would stay in power or not. The programs include free medical attention and education as a part of “21st Century Socialism” promoted by Chávez.

In the 2008 budget approved last November by Congress, 4 percent —US$2.5 billion — was designated for the social programs, referred to as “missions”, having been bolstered by the price of oil, which currently borders $100.

There are 20 missions in all, which — according to Pulido — are non-systematic due to their lack of institutionalism, are exclusive since they demand political affiliation with the Bolivarian process, and lack control.

Ratified for another seven years at the beginning of January, Comptroller General Clodosvaldo Russián admitted difficulties in supervising how public money is spent on these programs.

For Aura Gil, 35-year-old student at the Ribas Mission, a secondary school for adults, the government is doing what’s right so that “the poor move forward.”

In less than two years, Gil completed her primary education and managed to combine work with studies. The government gives the equivalent of $139 monthly grants to participants. “Those who receive this grant really need it,” said Gil.

Meanwhile, there was 22.7 percent inflation in Venezuela in 2007, one of the highest in the region according to the Venezuelan Central Bank. However, the impact was greater for the poor — as even the BCV admitted — since there was a 30 percent increase in prices of food and drink, where the poor spend more.

Venezuela has a population of 28 million and the current minimum wage is equivalent to $286. The Social Analysis Center, which for the past 15 years has calculated the basic food basket for a five-person household, estimated it last December at $1,178 per month.


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