Information about Venezuela

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ECONOMIC AND SOCIAL DEVELOPMENT

Economy

Description of the Venezuelan Economic Model
Achievements in the Economy
U.S.-Venezuela Economic Agreements
Ministries, Organizations and Institutions

Social Development

Social Policies (Health, Education, Nutrition, etc.)
Achievements in Social Development
Social Missions
Ministries, Organizations and Institutions

Economy

Description of the Venezuelan Economic Model

According to Article 299 of the Constitution of the Bolivarian Republic of Venezuela, the socio-economic model of the country “is founded on the principles of social justice, democracy, environmental protection, productivity, free and loyal competition and solidarity in order to ensure integral human development and a beneficial and profitable existence for the collective.” In this sense, it also states that “The State, jointly with private initiatives, will promote the harmonic development of the national economy in order to generate sources of employment and an addition of high value to the economy; to elevate the population’s standard of living and strengthen the economic sovereignty of the country; to guarantee the legal security, solidarity, dynamism, sustainability, continuity and equity of economic growth; and achieve a just distribution of wealth via strategic planning that is democratic and of open discussion.”

Achievements in the Economy

Economic Growth

In spite of the global economic crisis, since 2004, the Bolivarian Republic of Venezuela has maintained continuous economic growth. During 2002-2003, Venezuela experienced an economic contraction caused by a coup attempt and a sabotage of the country’s oil industry, though the economy began growing again once the political turmoil subsided. In 2004, Venezuela’s gross domestic product (GDP) grew by 18.3%, an historic rate of economic expansion. In 2008, GDP growth reached 4.9%. Today, Venezuela is the fourth largest economy in all of Latin America, after Brazil, Mexico and Argentina.

Tax Collection

Since the election of President Hugo Chávez, the Venezuelan government has made a special effort to introduce new technologies to maximize the efficacy of Venezuela’s tax collection systems. This policy has had very positive results with regard to non-petroleum tax collection, one of the state’s main sources of income. The level of efficacy achieved is easily seen in the collection goals reached. For example, for the 2008 fiscal year, the collection of the non-petroleum taxes reached 44.5%, while petroleum taxes amounted to 54.18% of the total collections.

International Reserves

The government of President Hugo Chávez has carefully managed Venezuela’s international reserves. At the beginning of 1999, international reserves stood at $14 billion, while by January 2009 they had increased to $41 billion. According to the Partial Reform Law of the Central Bank of Venezuela, as of August 2005, excess reserves (those above the $30 billion optimal reserve levels) are transferred from the Central Bank of Venezuela to the National Development Fund (known as FONDEN in Spanish). These funds are used to finance investment projects in infrastructure, education, health and other strategic sectors.

Commercial Exchange

Since 1999, Venezuela has increased its commercial exchange, not just with countries in the hemisphere, but also with other regions throughout the world. The majority of Venezuela’s trade, however, is conducted within the region, with around 70 percent of oil exports destined for Latin American countries and advances in the relative importance of South America, Central America and the Caribbean. In 2008, Venezuela’s primary commercial partner was the United States, which amounted to 44% of Venezuela’s total commercial exchange.

Public Debt

Venezuela’s national sovereignty has been strengthened due to a significant reduction of public debt relative to the size of its economy. Between 1999 and 2008, the Venezuelan government reduced the level of national public debt as a percentage of the GDP by 16%, from 29.5% in 1998 to 13.5% in 2008. The national public debt reached its lowest level in 20 years, signifying a 60% reduction during this period. Currently, the Bolivarian Republic of Venezuela has completely repaid its debt to the World Bank and the International Monetary Fund (IMF), a figure that reached $3.3 billion in 1998. This action was evidence of the country’s fiscal responsibility and commitment to meeting its debt obligations.

U.S.-Venezuela Economic Agreements

Double Taxation

The Bolivarian Republic of Venezuela has entered into a number of international conventions, treaties and agreements with the purpose of facilitating processes of commercial exchange. Double taxation is one of those. It can be defined as the implementation of a series of technical and legal instruments that are carried out between two or more countries, or within various levels of government. The purpose is to prevent an individual, country or government from paying the same tax twice. The double taxation treaty also aims to prevent international double taxation. It consists of establishing a determined income beforehand only in one of the two contracted states or that both states be taxed, with the tax obligation falling on one of the two, allowing the full tax paid in the other state to be deducted from the tax owed based on internal regulation.

The United States is one of the countries with which Venezuela has entered into this type of agreement to avoid double taxation and to prevent tax evasion in matters of income tax and patrimony. The agreement between the U.S. and Venezuela is detailed in Gazette No. 5.427, published January 5, 2000, and outlines the taxes covered, general definitions and other relevant information.

If you wish to consult other conventions and agreements signed with other countries to avoid double taxation, consult the National Integrated Service of Tax and Customs Administration (SENIAT).

Preferential System of Tariffs

The Preferential System of Tariffs, known in English as the Generalized System of Preference (GSP), is a commercial program whose main objective is to grant a preferential processing to the importation taxes of more than 5,000 imported products originating from almost 140 developing countries. These products will enter the U.S. marketplace exempt of customs taxes. The products included in the program are identified in the Harmonized Tariff Schedule of the United States.

Ministries, Organizations and Institutions

Non-Governmental Organizations

II. Social Development

Social Policy

The well-respected U.S.-based Center for Economic and Policy Research (CEPR) pointed out in an analysis on the Venezuelan economy, “The central government’s social spending has increased massively, from 8.2 percent of GDP in 1998 to 13.6 percent for 2006. In real (inflation-adjusted) terms, social spending per person has increased by 170 percent over the period 1998-2006. However, this does not include PDVSA’s social spending, which was 7.3 percent of GDP in 2006. With this included, social spending reached 20.9 percent of GDP in 2006, at least 314 percent more than in 1998 (in terms of real social spending per person).”

Health

According to Article 83 of the 1999 Constitution, health is a fundamental social right and it is the state’s obligation that it be guaranteed as part of the right to life. To guarantee the right to health, according to Article 84 of the constitution, “The State creates, exercises guidance over and administers a national public health system that crosses sector boundaries, and is decentralized and participatory in nature, integrated with the social security system and governed by the principles of gratuity, universality, completeness, fairness, social integration and solidarity. The public health system gives priority to promoting health and preventing disease, guaranteeing prompt treatment and quality rehabilitation. Public health assets and services are the property of the State and shall not be privatized. The organized community has the right and duty to participate in the making- of decisions concerning policy planning, implementation and control at public health institutions.”

Investments in Health

As of January 2009, Venezuela maintained an investment of 4.2% of Gross Domestic Product (GDP) in health, and efforts to guarantee free access to health care for all Venezuelans are ongoing. In 1999, investments in health were equal to only 1.46% of GDP.

Social Missions for Health

Education

According to Article 102 of the 1999 Constitution, “Education is a human right and a fundamental social duty; it is democratic, free of charge and obligatory. The State assumes responsibility for it as an irrevocable function of the greatest interest, at all levels and in all modes, as an instrument of scientific, humanistic and technical knowledge at the service of society. Education, is a public service, and is grounded on the respect for all currents of thought, to the end of developing the creative potential of every human being and the full exercise of his or her personality in a democratic society based on the work ethic value and on active, conscious and joint participation in the processes of social transformation embodied in the values which are part of the national identity, and with a Latin American and universal vision. The State, with the participation of families and society, promotes the process of civic education in accordance with the principles contained in this Constitution and in the laws.”

Social Missions for Education

Nutrition

The function of the Ministry of the People’s Power for food is to guarantee access to adequate nutrition through the regulation, formulation, monitoring and evaluation of policies related to the production and distribution of food including its storage, preservation, transportation, delivery, quality and consumption. This ministry also oversees food safety inspections and the sanctioning of agricultural storage and activities, as well as the administration, operation and use of silos, refrigerators, stores and state-owned agricultural deposits. It regulates and grants permissions, authorizations, licenses and certificates necessary in export- and import-related matters in the food sector. Likewise, the Bolivarian Government has created social missions focused on nutrition with the purpose of aligning the policies of the Ministry with the needs of the Venezuelan population.

Social Missions for Nutrition

Nutrition (Mercal) Mission

Achievements in Social Development

In spite of being a country rich in petroleum resources, for many decades the majority of Venezuelans were affected by poverty. After a series of harsh economic reforms prompted by the IMF in 1989, the percentage of Venezuelans that lived in poverty shot from 43.9% to 66.5% over the course of a year. President Hugo Chávez denounced the negative impact that poverty was having in the country prior to his first election in 1998. He pointed out that Venezuela’s poverty had forced millions of citizens to the margins of society, excluding them in this manner from a significant part of the political, economic and social life of the country. The high levels of poverty were diminishing the faith of the people in the democratic institutions of the country, to the point that the conditions led to an increase in crime and prevented the country from embarking on the path of sustainable growth and development. During his campaign, President Chávez promised to fight the problem of poverty relentlessly, a promise he’s kept and, in his own words, will continue to do so until it’s done away with.

The government of President Hugo Chávez has managed to considerably diminish the extreme poverty index. For the month of July 2009, this index hit 7%, while in the 1990s it reached 42%. Thanks to this, Venezuela surpassed the objectives established in the UN Millennium Development Goals. The index of household poverty has also undergone a significant reduction: it fell from 50.5% in 1998 to 26% by the middle of 2009. Venezuela’s Human Development Index (HDI) increased from 0.69 in 1998 to 0.84 in 2008, which elevated Venezuela from the status of a country with the rank of “medium” human development to one with a “high” rank. In 2008, Venezuela ranked 61st out of the 179 countries listed, according to the annual report of the United Nations Development Program (UNDP). The Gini coefficient, a measure of income inequality, reached 0.4099 in 2008, the lowest level in Venezuelan history and the lowest in Latin American Continent. In 1998, it was 0.4865.

The government has also made important achievements with regard to health, such as lowering the infant mortality rate to 13.7% (in 1990 it was 25.8%) and increasing access to health care for more than one million low-income Venezuelans through the social mission known as “Barrio Adentro” (Inside the Neighborhood).

Finally, it is important to point out that Venezuela has the second-highest level of higher education enrollment in Latin America – 83% – following only Cuba, which occupies the first position with 88 percent according to the Institute of Statistics of UNESCO.

For more information on achievements and advances in social development in Venezuela over the last decade, please see the following fact sheet: Thirteen Years, Thirteen Advances.

Social Missions

A principal tool used by President Chávez in his campaign to end poverty has been social missions, programs financed by the state that tackle urgent needs in areas such as education, health, nutrition, job training and housing. According to the Ministry of Planning and Development, the missions began in 2003 and were financed through an increase in social spending (currently set at 20.2% of GDP). The missions have brought doctors, educators and social workers to thousands of poor communities throughout the country to offer important services at no cost to citizens.

The missions have been shown to be effective and highly popular. They provide integral solutions to poverty, improve access to credit, focus efforts on gender and racial equality, and foster community empowerment. The missions have helped to reduce the poverty index and have increased the population’s social conscience. Studies have shown that the social missions have contributed to a 9.9% reduction in the poverty index since 2003.

For detailed information on the various social missions in Venezuela, see Social Missions in Venezuela.

Ministries, Organizations and Institutions

Source:

“Constitution of the Bolivarian Republic of Venezuela,” Published in the December 30, 1999, Official Gazette, No. 36.860. (Accessed March 24, 2009).
Ministry of the Popular Power for Communication and Information, “Already 10 Years of Achievements.” February 5, 2009. (Accessed February 6, 2009).
Ministry of the Popular Power for Economy and Finances “Report on 2008 management–National Office of the Treasury Data.”
Bolivarian News Agency, “International Reserves of Venezuela are in the $29 Billion.” . (Accessed June 17, 2009).
Ministry of the Popular Power for Communication and Information, “Already 10 Years of Achievements.” February 5, 2009. (Accessed February 6, 2009).
“Annual message to the Nation by the President of the Bolivarian Republic of Venezuela, Hugo Chávez,” Legislative Federal Palace, Caracas, Tuesday, January 13, 2009. (Accessed February 3, 2009)
Central Bank of Venezuela, “Exports and Imports of Goods and Services by Sectors. Year 2009,” . (Accessed June 17, 2009).
Ministry of the Popular Power for Economy and Finances – Central Bank of Venezuela (CBV) – own calculations. The remainder of the public debt corresponds to the close of 08/30/2008 quarter; the GDP are CBV estimations. (Traducción para el texto bajo la grafica arriba).Ministry of the Popular Power for Communication and Information, “Already 10 Years of Achievements.” February 5, 2009. (Accessed February 6, 2009).
Ministry of the Popular Power for Communication and Information. Venezuela in Truth, “The Venezuelan public debt has decreased more than 50% in the last 10 years.”. (Accessed June 10, 2009).
National Integrated Service of Tax and Customs Administration (SENIAT). (Accessed June 17, 2009).
Mark Weisbrot and Luis Sandoval, “Update: The Venezuelan Economy in the Chávez Years.” CEPR. (February 2008). 10.
Bolivarian News Agency (ABN), “More than one Million Venezuelans Live Thanks to the kindness of Neighborhood Inside (Barrio Adentro) I and II, . (Accessed June 17, 2009).
“Constitution of the Bolivarian Republic of Venezuela,” Published in the December 30, 1999, Official Gazette No. 36.860, . (Accessed March 24, 2009).
Ministry of the Popular Power for Communication and Information, National Radio of Venezuela, “Complete Transcript of the Speech of by Memory and Account, presented by President Hugo Chávez Frías before the National Assembly.” January 13, 2009. (Accessed January 14, 2009).
Vice-presidency of the Bolivarian Republic of Venezuela, “Precise Government Open to Dialogue Without Hidden Agendas,” February 26, 2009. (Accessed February 23, 2009).
Ministry of the Popular Power for Nutrition, “Mission,” . (Accessed December 9, 2008).
Venezuelan Information Office, “A Mission to End Poverty,” . (Accessed December 15-18, 2008).
Embassy of the Bolivarian Republic of Venezuela in U.S., Informative Documents “Social Justice,” . (Accessed December 9, 2008).
Bolivarian News Agency, “INE: Diminished the Poverty in Venezuela,” , July 22, 2009 (Accessed July 27, 2009).
Bolivarian News Agency, “Neighborhood Inside has Saved More Than One Million Lives in Four Years.” , June 11, 2009. (Accessed August 13, 2009).
Ministry of the Popular Power for Nutrition, Achievements. “Management of the Ministry of the Popular Power for Nutrition - 1st semester 2008 . (Accessed February 15, 2009).
Ministry of the Popular Power for Communication and Information, “Already 10 Years of Achievements.” February 5, 2009. (Accessed February 6, 2009).
Press Embassy of the Bolivarian Republic of Venezuela in the U.S., Informative Documents, “Social Justice,”, (Accessed December 9, 2008).
Ministry of the Popular Power of Communication and Information (2006). The Bolivarian Missions. Collection Themes of Today, First Edition.
Embassy of the Bolivarian Republic of Venezuela in the U.S., “The Bolivarian Missions.” September 2007.
Government Online, “Missions,” , (Accessed December 1, 2008).
Embassy Press of the Bolivarian Republic of Venezuela in U.S., Informative Documents, “Social Justice,”. (Accessed December 9, 2008).
Embassy of the Bolivarian Republic of Venezuela in the U.S., Informative Documents, “Social Justice,” . (Accessed December 9, 2008).
Embassy of the Bolivarian Republic of Venezuela in the United States, “The Bolivarian Missions.” September 2007.
Government Online, “Missions,” . (Accessed January 20, 2009).
Ministry of the Popular Power for Nutrition, Achievements, “Management of the Ministry of the Popular Power for Nutrition—1st Semester 2008,” . (Accessed December 9, 2008).
Ministry of the Popular Power for Nutrition, “Mission,” . (Accessed December 9, 2008).
Ministry of the Popular Power for Communication and Information, “Already 10 years of Achievements.” February 5, 2009. . (Accessed February 6, 2009).
Ministry of the Popular Power for Communication and Information, “Neighborhood Inside has Benefited 88.9% of the Population.” January 13, 2009,. (Accessed January 15, 2009).
Ministry of the Popular Power for Communication and Information, “Venezuela Places Second in Latin America in Registration of Higher Education.” January 13, 2009. (Accessed January 13, 2009).
Ministry of the Popular Power for Communication and Information, National Radio of Venezuela, “Complete Transcription of the Speech Presentation by Memory and Account Presented by President Hugo Chávez Frías before the National Assembly.” January 13, 2009. (Accessed January 10, 2009).
Department of the Popular Power for the Education. (Accessed January 13, 2009), Supreme court of Justice. “Constitution,”.
Venezuelan Information Office, “A Mission to End Poverty,” . (Accessed December 15-18, 2008).
Venezuelan Information Office, “Healthcare for All,” . (Accessed December 15, 2008).
Vice-presidency of the Bolivarian Republic of Venezuela, “Precise Government Needed that is Open to Dialogue Without Hidden Agendas,” February 26, 2009. (Accessed February 23, 2009).

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