Venezuela, rich in natural resources and with one of the largest oil and mineral reserves in Latin America and the Caribbean, is a country with huge potential to reach sustainable economic and social development.

However, poverty is still a major challenge for the government and, in the past two decades, the country has gone through great political, social and economic turmoil.

A charismatic, populist left-winger, Chavez promised broad reforms, constitutional change and nationalization of key industries under his so-called Bolivarian Revolution.

His programs, aimed at helping the poor, include free health care, subsidized food and land reform, which have succeeded in decreasing poverty levels by 30% between 1995 and 2005, mostly due to an increase in the real per capital income.

Extreme poverty diminished from 32% to 19% of the population during the same period. However, poverty rates are volatile due to the also volatile economic growth, which overall results in high poverty levels with respect to the increasing income levels during the decade.

Polarization

Venezuelan society is deeply polarized around the president’s personality and ruling style. He enjoys strong support from the popular classes while being reviled by the elite and middle classes who accuse him of wanting to impose a Cuban-style authoritarian government.

During his long years in office, President Chavez has faced a coup, protests, strikes, civil unrest and an increasingly acerbic opposition.

Although voters rejected proposals to extend his powers and accelerate his socialist-style reforms in 2007, Venezuelans backed the president by voting to abolish term limits in a 2009 referendum, clearing the way for Mr. Chavez to run for re-election in 2012.

SOCIAL PROGRESS AND IMPROVEMENTS IN VENEZUELA 91% of children is enrolled in primary schools. 83% of the population has access to drinking water. Child mortality decreased to 18 per 1,000 born alive in 2005. Per capita income increased to US$6,070 in year 2005.

Venezuela’s economic fortunes are tied to world oil prices. Oil gives Venezuela a competitive advantage in international trade. But it also throws the domestic economy off balance, as it accounts for more than 30% of the gross domestic product (GDP), approximately 90% of exports and 50% of fiscal income.

President Chavez announced fiscal measures to counteract the impacts of the global crisis and the reduction of oil prices —the value of the Venezuelan barrel decreased from $129 (July 2008) to $43 (March 2009) — although it has been recovering recently.

Some of the measures include a 6.7% cut in the 2009 budget and an 18% nominal reduction as compared with the 2008 budget. Salaries of high-level officials were reduced and VAT increased from 9% to 12%. Likewise, President Chavez requested the National Assembly authorization to triple the domestic debt. Additionally, the Central Bank of Venezuela reduced the interest rates of savings and credit accounts in general.

Also, President Chavez announced that social programs will not be cut and refused any devaluation and gas price increase. At the same time, the government reported additional exchange control restrictions to mitigate pressures on the exchange rate and to safeguard international reserves.

In December 2002, the World Bank Group agreed on an Interim Country Partnership Strategy (CPS) with Venezuela, the purpose of which was to lay the foundations for a productive relationship with the government. This CPS focused on the recovery of economic growth and on poverty reduction, for which it relied on financial support projects and analytical services, including a study on the international experience in managing oil rises and falls; a poverty assessment and a labor market analysis.

The CPS anticipated a three-year funding program for the 2003-2005 period. The program included investment operations: (a) with the highest poverty reduction potential; (b) that would allow Venezuela to meet the Millennium Development Goals by 2015, (c) would strengthen sector policies enabling a sustainable development, and (d) would mainstream lessons learned from the review of the World Bank funded project portfolio.

Currently, the World Bank manages only non-repayable funding projects through its Liaisons Bureau in Venezuela. The following projects are being executed:

Biodiversity Conservation - Dhekuana Nonoodo (GEF-MSP): This project focuses on the sustainable use and conservation of biodiversity resources in the Indigenous Territory Dhekuana with funding from the Global Environmental Facility and implemented by the community organizations “Otro Futuro” and “Kuyujani Originario”, with the participation of the Venezuelan Institute of Scientific Research (Instituto Venezolano de Investigaciones Científicas, IVIC), and the Geographic Institute (Instituto Geográfico de Venezuela Simón Bolívar), among other public agencies. This initiative aims at laying the foundations for the conservation of natural biodiversity through the management of resources by the local communities in the indigenous territory Dhekuana located in Alto Orinoco, Amazonas state.

The Information System for Social Program Assessment and Monitoring in Venezuela (SIEMPROVE) Project is carried out by the national Statistics Bureau (Instituto Nacional de Estadística - INE). Its objective is to design and implement a pilot model for the establishment of a social program assessment and monitoring system in Venezuela, which is expected to be part of the national statistics system. The pilot system will be developed on two fronts: Vuelvan Caras–Che Guevara and Ribas, focused, respectively, on labor skills training and promotion of cooperatives for the establishment of a new social-productive scheme, and on providing youth and adults with lower secondary education.

Ozone Layer Protection Project The industry and technology retrofitting fund (Fondo Venezolano de Reconversión Industrial y Tecnológica - FONDOIN), under the leadership of the Ministry of Light Industry and Trade, was appointed as a focal point or National Ozone Unit to implement the Montreal Protocol project regarding Ozone Depleting Substances. The main goal of this project was the early removal of chlorofluorocarbons (CFCs) production in Venezuela with positive impacts on the global CFC market while helping the government meet the indicators established in the Montreal Protocol on CFC production and use.

Caracas Slum-Upgrading Project: Improved the quality of living of at least 115,000 people, which accounts for 97.4% of the population in Petare Norte, La Vega and Vargas, and 9.6% of the population in the neighbourhoods of Caracas. Specifically, the project improved access to water and sanitation services, facilitated access to electricity, contributed to the construction of community service centres, increased community involvement and facilitated access to land titles by informal dwellers.

Endemic Disease Control Project: Helped control malaria and other endemic illnesses, such as the Chagas disease, dengue fever, yellow fever, leprosy and leishmaniasis. The project reduced the incidence and impact of endemic diseases and strengthened institutions responsible for their control. Currently, Venezuela is better prepared to apply modern technologies in the control and treatment of these illnesses given the improved training and the establishment of research, diagnostic and field support centers.

Urban Transport Project : Considerably strengthened the capacity of urban transportation agencies in 12 Venezuelan cities. More than 250 experts from the National Urban Transportation Fund (Fondo Nacional de Transporte Urbano - FONDUR), municipalities and the private sector received training in transport economy and planning, general and environmental management, engineering, procurement, transport supervision and monitoring and information systems. Between 1994 and 2001, more than 7,700 bus drivers attended courses to develop new skills and improve their knowledge on traffic laws and road safety.

Voces Nuevas 2007 with the Youth Observatory in the La Trilla neighborhood adds to the 10 previous experiences with Youth Observatories funded by the World Bank in partnership with other four donors. These efforts helped promoting the development of observation methods and techniques in order to provide adequate voice to the leadership of youngsters in community organizations. The program provided participants with a life experience in which youth from diverse backgrounds had the opportunity to talk about their differences, their perceived needs, and their various views about the reality in which they live.

CONTACTS:

Cateryn Vucina Banjanin
Consultant on Foreign Affairs and Development Communications (in Venezuela)
Tel: 5255 - 54804200
email: cateryn_vucina@hotmail.com