DEVELOPMENT PROGRESS

A country rich in natural resources, with one of the largest petroleum and mineral reserves in Latin America and the Caribbean, Venezuela has a great potential to achieve sustainable economic and social development. Nevertheless, the country has suffered a prolonged economic and political crisis, high levels of crime and violence, and long-term social ills such as extreme inequality and poverty.

Oil confers a competitive advantage in international trade, but also creates an imbalance in the domestic economy. Petroleum accounts for about 25 percent of gross domestic product (GDP), about 80 percent of exports and approximately 50 percent of fiscal revenues. A windfall from Venezuela’s natural resource wealth has bolstered development progress in some areas:

• 92.4 percent of the country’s children are enrolled in primary school;
• 83 percent of the population has access to an improved water source; and
• Child mortality decreased from 27 per 1,000 in 1990 to 22 per 1,000 in 2002.

       
Click here for a map of Venezuela

Source: Millenium Development Goals

 CHALLENGES AHEAD

Despite the country’s progress, the percentage of Venezuelans living in poverty (household income of less than $2 a day) has increased from 32.2 percent in 1991 to 48.5 percent in 2000. Likewise, the proportion of those living in extreme poverty —below $1 a day— rose from 11.8 percent to 23.5 percent. This increased poverty is accompanied by a widening inequality gap. Currently, the richest 20 percent of Venezuelans receives 53 percent of all income, while the poorest 20 percent accounts for only a three percent share of the country’s total income.

Most observers agree that the biggest obstacle to  stable growth in Venezuela is the country’s polarized political climate. A successful conclusion to continuing efforts at mediation of the country’s political divisions would be a strong factor in favor of improving Venezuela’s prospects for growth and poverty  reduction.

Long-standing inefficiencies in the public sector have blocked the creation of effective poverty-reduction policies. Educational and health programs aimed at strengthening human capital have been stymied. The banking system has been weakened by capital flight, making access to credit difficult for consumers and business people alike.
 

Source: Millenium Development Goals

WORLD BANK ASSISTANCE TO VENEZUELA

In December 2002, The World Bank Group completed an Interim Country Assistance Strategy (ICAS) for  Venezuela aimed at laying the foundation of a productive relationship with the Government of Venezuela. The ICAS focuses on restoring economic growth and reducing poverty and is supported by lending projects and analytical services, including a study of international experience in managing oil booms and busts, a poverty assessment, and a labor market analysis.

The ICAS plans a three-year lending program that could reach $300 million during 2003- 2005. The program would consist of investment operations that: (a) have the most tangible impact on poverty alleviation; (b) help Venezuela meet the Millennium Development Goals by 2015; (c) reinforce conducive sector policy; and (d) incorporate lessons from the recently completed portfolio review. The World Bank Group will search for and seize opportunities to foster consensus-building in four areas of reform:

• Macroeconomic stability
• Sustainable economic diversification and competitiveness
• Environmentally and socially sustainable development
• Good governance

The Bank’s current portfolio in Venezuela includes four projects totaling $116 million. These include a $30.3 million Caracas Metropolitan Health Services Project, which supports the country’s effort to improve public health in neighborhoods inhabited by about 70 percent of the 2.4 million residents of Venezuela’s largest city. Hospital emergency rooms are overburdened because primary care and disease prevention programs at the neighborhood level are inadequate. One result is that key health indicators including infant and maternal mortality, as well as life expectancy, are worse for Venezuela than for several other countries in the region, including the Dominican Republic, Jamaica, Colombia and Costa Rica. The project’s overarching goal is to establish a grassroots health system that includes neighborhood clinics, paramedic service, and hospitals. Once it is fully operational, the system will expand preventive care at the neighborhood level, freeing
hospitals to handle major cases.

The $60.7 million Caracas Slum Upgrading Project (CAMEBA) works with FUNDACOMUN, a decentralized government agency, to improve the living conditions in
selected slum barrios of the Caracas metropolitan area. Widespread rural-to-urban migration over the past 50 years has resulted in the growth of informal settlements that lack many basic services. Without rights-of-way, vehicles cannot gain access to many of these areas, which makes it impossible to provide adequate services such as solid waste collection, police protection, firefighting and rescue. Access to water is universal, but informal and precarious. Waste water coverage is high, but improvised, and large numbers of barrio residents live on unstable terrain, including steep hillsides. This project, launched in 1999, directly involves about 15 percent of the residents of the barrios of Petare Norte and La Vega in public works projects to address these problems. To date, the project has rehabilitated rights-of-way such as public stairways, pedestrian walkways, and has built sewerage collectors, retaining walls to prevent landslides, and community centers.

International Finance Corporation
The International Finance Corporation has invested $408 million in 13 projects aimed at diversifying the country’s economy to lessen its vulnerability to petroleum prices. Ten of IFC’s investments are in non-oil businesses including telecommunications, electricity, forestry, aquaculture, ports and manufacturing.

 
Project data as of August, 2004

 PROJECT ACHIEVEMENTS

Venezuela has achieved encouraging results with support from the World Bank. Recent examples include:

Health
The Endemic Disease Control Project helped to control malaria and other endemic diseases such as Chagas, dengue, yellow fever, leprosy, and leishmaniasis. The project lowered the incidence and impact of endemic diseases, and strengthened the institutions that are responsible for their control. Currently, Venezuela is better prepared to apply modern technology to control and treat these causes of ill health thanks to expanded training and the creation of research, diagnostic, and  field support facilities.

Between 1996 and 2000, the project saved an  estimated 11,500 lives, prevented 500,000 illnesses, and treated about 3.5 million non-lethal infections. Under the project, the Malaria Directorate was able to control malaria in approximately 408 square kilometers where the disease is endemic. The number of deaths due to malaria dropped from 25 per year in 1995 to 7 in 1999, while the number of cases decreased from 22,056 to 21,685. In the state of Bolívar, the time from onset of symptoms to treatment was cut by 33
percent, diminishing the prevalence and possibility of transmission. A significant decline in mortality due to dengue was also achieved between 1995 and 1999. In 1995, dengue took the lives of 65 people. By 1999, the number of deaths dropped to 15, and the number of cases decreased from 32,280 to 26,602. Strengthened control activities also moved Venezuela into the elimination phase of leprosy, according to Pan American Health Organization standards. Improvements in detection and treatment decreased the number of children affected and people incapacitated by the ailment.

Urban Transport

The Urban Transport Project significantly bolstered the capacity of urban transport institutions in 12 Venezuelan cities. Over 250 professionals from the National Urban Transport Fund, municipalities, and the private sector benefited from training in transport planning and economics, environmental and general management, transportation engineering, procurement, supervision and monitoring, and information systems. Between 1994 and 2001, more than 7,700 bus  operators attended courses to develop new skills and refine their knowledge of traffic laws and road safety. Although there is no baseline data on road safety, most participating cities claim there has been a downward
trend in accidents and fatalities since project  implementation.

The improved ability to plan civil works has increased the efficiency of traffic and transport operations. The project helped to carry out 135 civil works covering road rehabilitation, additional signage and bus stops, repaving, maintenance, and rationalization of bus routes. As a result, traffic congestion diminished and peripheral urban areas gained access to transportation services. Since poor people are the main users of public transportation, expanding access to peripheral urban areas is an effective tool for poverty alleviation.

For more information on World Bank assistance to Venezuela including lending breakdown and project reports, see:

Proposed Projects
All Projects

Additional data on Venezuela, source World Development Indicators

Updated August, 2004