CARACAS, Venezuela – As the reign of Hugo Chavez dwindled down in the days before he lost his battle to cancer, he passed his legacy onto a single man. Nicolas Maduro was delegated as Chavez’s successor, but this title was accompanied by much more than a sense of entitlement.
To be more precise, on December 8, 2012, Chavez announced that Maduro would be his rightful beneficiary, thus passing on both the debts and tribulations of Venezuela, as well as the broken economic state of poverty that Chavez left behind.
Currently, Venezuela’s economic state is one of extreme unrest; with the price of the dollar surging to six times the official rate and poverty rates skyrocketing, it is no wonder that government approval has been plummeting.
In the years before his political career, Maduro worked as a bus driver. It was not until 2006 that Maduro was named the prime minister of his home country. Following this, during the reelection of Chavez for his third term, Maduro was named as his vice president.
During his control, Chavez managed to accomplish various feats in the progression of Venezuela’s economy. In 2002, he was able to slice the poverty rate from 48.6 percent, to 29.5 percent in 2012.
The dramatic decrease in poverty was due, in part, from the capitalization on oil reserves in the country. As it now stands, Maduro is faced with solving many issues, including banks’ heading towards liquidity, the country’s being unable to accommodate the demands for capital flight and imports as well as cutting crime and poverty rates.
In the election for presidency, Maduro ran against Henrique Caprilles. It was during this race that Maduro won by one of the smallest margins in Venezuelan history, winning by 50.66 percent to 49.07 percent.
At the beginning of his term, Maduro was quoted as saying, “If you ask me what I’m going to do here, I’m going to carry out Hugo Chavez’s legacy,” before continuing on to list that he will focus on crime, government efficiency, and the economy.
Nonetheless, will relying on Chavez’s memory buy him the time he needs to mend a poverty stricken country on its downward spiral?
Venezuela is a country where 5 percent of its GDP is dependent upon and generated from agriculture. Furthermore, with a population of approximately 30 million people, 38 percent of individuals live in poverty.
10 percent of the entire population lives in extreme poverty, a factor that consistently plagues the image of progress Maduro attempts to make. The poverty that continues to hinder Venezuelan society is anticipated to leave long-term effects in education, growth and productivity, among others.
Eleven percent of Venezuelans live in rural areas, while a whopping 50 percent of the nation’s population is poor. Despite the efforts of Chavez prior to his death, the rates of poverty continue to climb.
Much of Chavez’s political success in diminishing poverty rates resided solely in the dependency of rising oil revenue. Yet, in the last decade, these prices for oil have evened off, once again peeling back the Band-Aid quietly placed over the real issues.
Due to the reliance on imports, Venezuela’s currency took a hit of 46.5 percent devaluation. Also striking Venezuela’s poor is the 30 percent rate of inflation that they suffered, one among three of the highest inflation rates in the world.
As Venezuela grows impatient with the living conditions, Maduro fights to maintain the image and legacy that Chavez left behind, though many are not confident in the fact that this will be enough to save the declining economic state.
“Maduro has inherited a very difficult situation in terms of the economy,” said Victor Sierra, a managing partner and head of sales and trading for emerging market fixed income at Torino Capital LLC. “They haven’t changed the oil in the car for a very long time, and it’s about to have some serious issues.”