Sunday, October 30, 2005

Poverty Has Fallen In Venezuela

 Poverty Has Fallen In Venezuela  

2005-10-29 / Knight Ridder / By Andres Oppenheimer

Just a few months after Venezuela's official statistics institute reported that poverty had increased by 11 percent since President Hugo Chavez took office in 1999, the same institution is now reporting - after a public scolding by the president - that poverty has suddenly dropped to pre-1999 levels.

Before I tell you what explanation I got from the president of Venezuela's government-run National Statistics Institute, let's recap the statistics of Venezuela's official poverty figures.

You may recall that in March I reported in this column that Venezuela's INE had said poverty had risen from 43 percent to 54 percent of the population during Chavez's first four years in office. The report said that extreme poverty - the poorest of the poor - had increased from 17 percent to 25 percent of the population.

And you may recall that I made a big fuss about these figures. I noted that Chavez, a self-described champion of the poor, had managed to increase poverty despite the biggest increase in Venezuela's oil-export income in modern history. Oil, which accounts for about 80 percent of Venezuela's foreign income, has risen from US$9 a barrel when Chavez took office to more than US$60 a barrel today.

Change in methodology

Shortly after I wrote about these figures, Chavez criticized the INE's statistics, saying they reflected a "neo-liberal" free market way of measuring poverty that did not reflect the reality of a "socialist" economy like Venezuela's. He called on the INE to change.

Well, guess what? A new INE poverty report published this week shows a near miraculous decline in Venezuela's poverty. Overall poverty has suddenly plummeted to 38.5 percent of the population - 4.5 percent below what it was when Chavez took office.

And the new figures for extreme poverty - the poorest of the poor - are even more startling: It has plummeted from 24 percent of the population in the first half of 2004 to 10 percent today.

"This is very suspicious," says Luis Pedro Espana, an economist who heads a poverty studies project at Venezuela's Andres Bello Catholic University. "If they had indeed reduced extreme poverty by more than half in a few months, it would be a world record."

Espana says that's not likely to be the case. He added that not even Chavez's massive social programs would help explain the dramatic reduction in extreme poverty, because they are most often concentrated in big cities, while the poorest of the poor tend to live in remote rural areas.

Reports criticize Chavez

Ana Julia Jatar, an economist with the Institute of Higher Administration Studies, noted that some of the figures in previous INE reports that reflected badly on the Chavez government have disappeared from the INE Web site.

"Venezuelan statistics are no longer credible," Jatar says. "They have become an instrument of propaganda."

Not true, INE's president Elias Eljuri told me in a telephone interview from Caracas. The new figures result from a dramatic increase in Venezuela's gross domestic product during the past two years. And they were taken using the same measuring standards as in previous years, he said.

"Poverty levels had soared in 2002 and 2003 because of a drop in the GDP caused by the (anti-Chavez) coup d'etat and the oil workers' strike," Eljuri said. "But since then, the economy has grown by 18 percent in 2004, and will grow by near 10 percent in 2005. A recovery of such magnitude brings about a drop in poverty rates."

"There is an opposition campaign against the INE," he told me. "When I reported that poverty had risen (during Chavez's first four years in office), I was their hero. Now that the economy has grown and I'm reporting that poverty has dropped, I've become a liar."

My conclusion: If Venezuela's INE is right, and wants to maintain its reputation of unbiased economic reporting, it should accept some adult supervision and open its books to independent economists, like most governments do.

Otherwise, I will have to conclude that it is following Cuba's example and has begun publishing its own happy figures, which nobody can independently corroborate. Miracles may exist, but most of us find them hard to believe.

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