CARACAS, (Reuters) – Venezuela reduced its poverty levels in the first half of the year despite a global recession and a sharp drop in oil revenues in the oil dependent nation, the head of the national statistics body said yesterday.
The government of socialist President Hugo Chavez says it has halved poverty with heavy social spending during his decade in office, although opponents say the rise in living standards is thanks to a long oil boom rather than specific policies.
According to the INE statistics institute, the nation’s poverty rate fell to 26.4 percent in the first six months of the year from 27.7 percent a year earlier, in part thanks to a minimum wage hike.
Some opposition analysts cast doubt on the reliability of INE’s methodology, and say poverty has not fallen as much as claimed.
Venezuela’s economy barely grew in the first three months of the year, but fared better than some of its recession hit neighbors. Chavez made some spending cuts at the start of the year, raised sales taxes and borrowed more to try to cover an expected budget deficit in South America’s top oil exporter.
Many economists warn restrictions like a fixed exchange rate could result in a sharp currency devaluation if oil prices do not recover, reversing some of the poverty gains.
Elias Eljuri, INE’s president, said extreme poverty dropped half a percentage point to 7 percent from the year before, with 2 million people still unable to meet their basic needs.
“This does not mean there is no inequality. The government has to keep redistributing income,” Eljuri told reporters.
Despite the drop in poverty, the distribution of wealth has not changed significantly in Venezuela since Chavez first took office in 1999, Eljuri said.
Chavez has spent billions of dollars on health and education programmes for the nation’s poor, but has also created a new clutch of wealthy families who benefit from juicy government contracts and distortions in the petro-state’s economy.
