A miracle! Venezuela's poverty has suddenly fallen

Posted on Thu, Oct. 27, 2005

THE OPPENHEIMER REPORT
A miracle! Venezuela's poverty has suddenly fallen

BY ANDRES OPPENHEIMER
aoppenheimer@herald.com

ANDRES OPPENHEIMER

aoppenheimer@herald.com

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

Before I tell you what explanation I got from the president of
Venezuela's government-run National Statistics Institute (INE), let's
recap the statistical roller-coaster 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 Chávez'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 Chávez, 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 $9 a barrel when Chávez took
office to more than $60 a barrel today.

Shortly after I wrote about these figures, Chávez 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 its methodology.

THE NUMBERS

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 Chávez 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 España, an economist who
heads a poverty studies project at Venezuela's Andrés Bello Catholic
University. ``If they had indeed reduced extreme poverty by more than
half in a few months, it would be a world record.''

España says that's not likely to be the case. He added that not even
Chávez'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.

VANISHING FIGURES

Ana Julia Jatar, an economist with the Institute of Higher
Administration Studies (IESA), noted that some of the figures in
previous INE reports that reflected badly on the Chávez government have
mysteriously disappeared from the INE website.

''Venezuelan statistics are no longer credible,'' Jatar says. ``They
have become an instrument of government 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-Chávez] 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 big drop in poverty rates.''

''There is an opposition campaign against the INE,'' he told me. ``When
I reported that poverty had risen [during Chávez'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 suddenly 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 it
hard to believe in them.

http://www.miami.com/mld/miamiherald/news/columnists/13007121.htm