Has Poverty in Venezuela Fallen or Risen Under President Hugo Chavez?

  • The household poverty rate was thus reduced by nearly 5 percentage points, or 12.9 percent, from 42.8 percent in the first half of 1999 (when President Chavez took office) to 37.9 percent in the second half of 2005. Since the economy has continued to grow rapidly this year (first quarter growth came in at 9.4 percent), the poverty rate is almost certainly significantly lower today.
  • There is no evidence that the Venezuelan National Institute of Statistics has changed its methodology, so these numbers are directly comparable. The most recent figures are about what would be expected as a result of the rapid economic recovery.
  • Most of the erroneous reporting on this issue results from using numbers gathered in the first quarter of 2004. These numbers reflect sharp increase in the poverty rate caused by the severe economic downturn of 2002-2003.
  • Since the preliminary poverty numbers for 2005 were released in September 2005, it is not clear why the out-of-date, early 2004 numbers have continued to be widely used. The early 2004 numbers quickly became out of date because of the rapid growth of the Venezuelan economy in 2004 (17.9 percent) and 2005 (9.4 percent), which pulled millions of people out of poverty.
  • The reduction in poverty noted above, since 1999, measures only cash income. This, however, does not really capture the changes in the living standards of the poor in Venezuela, since there have been major changes in non-cash benefits and services in the last few years – for example health care is now provided to an estimated 54 percent of the population. The paper looks briefly at the impact of these changes.