The Revolution Lags Behind in Aid Programs

Chavismo claims to be "for the poor," but just how much is it actually helping the most vulnerable of Venezuelans during the economic woes of the pandemic?

Photo: Rayner Peña.

This Monday, images of a card to restrict the movement of people in Catia, a populous parish in western Caracas, circulated through social media. The measure was applied following extensive reports of people taking to the streets to work and buy food, ignoring Maduro’s social distancing measures and curfews.

This is exactly why many people have argued a different approach against COVID-19 might be needed in low-income countries, but the situation also highlights the lack of a proper plan from the government to help the population cope with disruptions caused by the disease.

Most developed countries around the world quickly understood that if people were supposed to stay home for weeks during the pandemic, the state would have to provide them with some kind of financial aid. 

In the United Kingdom, the government has destined £330 billions in loans to support businesses affected by the pandemic. Workers diagnosed with COVID-19 or those instructed to self-isolate are being paid statutory sick pay of ₤94 per week, partially covered by the state. Access to universal credit schemes normally offered by the government have also been relaxed, so self-employed people can access them. 

A similar plan has been announced in Spain, where €100 billion in loan guarantees have been allocated and VAT payments have been deferred for 6 months. There’s also a complex aid scheme comprising a grace period for mortgage repayments, paid leave for employers that can’t WFH, and several subsidies for self-employed individuals.

The situation also highlights the lack of a proper plan from the government to help the population cope with disruptions caused by the disease.

In the United States, archetypal villain of the chavista mythology, the Senate approved a $2 trillion stimulus plan, the largest in American history, to give up to $1,200 to people earning less than $75,000 a year. The plan also includes subsidies and economic help for parents, freelancers and self-employed workers, about $850 billion in loan programs for small businesses and bigger companies and $100 billion to help hospitals in the frontline. Although on a considerably lesser extent, similar aid plans also exist in Latin America. The measures in Peru and Chile have been particularly important, with these countries committing 12% and 6% of their GDPs, respectively, to their aid programs. 

In Venezuela, the already agonizing economy is expected to be shaken by the pandemic. To cope with the situation, the regime announced an aid plan early on, but its poor design and limitations are evident.

One of the first measures announced was the coverage of payrolls for the whole private sector, an idea criticized by employers who requested the regime to ease draconian reserve-requirement ratios that have choked off bank lending in past years. If said plan only covered small and midsize businesses, the Venezuelan state would still need almost 100 million dollars every month to help the already terrible wages that an average private worker in Venezuela earns (about $45/mo). 

Maduro has also offered the “stay home bonus” equivalent to $6, to cover the expenses of self-employed workers, which represent 47% of the already reduced Venezuelan workforce.  As oil production falls to its lowest levels since 1945, global oil prices collapse and international economic aid looks hard to get, chavismo will likely have to resort to the printing press to finance handouts, further increasing what already is the highest inflation in the world.

The other measures announced include a suspension of interest payments to the few negligible credits still approved by banks and an order to mobile operators to refrain from suspending their services if clients fail to pay. This is almost a joke, considering the constant blackouts regularly affecting the nation.

For a government that built its fame on social aid, the bolivarian revolution is lacking a sensitive response to help Venezuelans hit the hardest by the pandemic, precisely the ones it allegedly serves best: the poor.