According to an Economic Times article written in August 2019, the dilemma of Maduro and the cash transfers was described like this: “President Nicolas Maduro has struggled to advance his predecessor’s agenda amidst a crippling economic contraction worse than the U.S. Great Depression.”
This simple but yet complex phrase gained much attention recently by the media, citizens, politicians and numerous commentators in Guyana.
It has even sparked some debate about whether it would be beneficial to spend Guyana’s future oil revenue that way.
Some have said that it will benefit the country, some are undecided and some are against it.
According to recent reports by this newspaper and other media houses, Guyana’s leaders are open to the idea of “Cash Transfers” but want more information and detailed studying in order to make a firm decision.
This discussion about this controversial issue all began when a proposal for Cash Transfers to every poor household was made by the Working People’s Alliance (WPA).
Back in August, 2018 Co-leader of the WPA, Dr. Clive Thomas, was the first to raise the proposal of the intended Cash transfers to poor households. He even recommended that the amount should be US$5000 per year.
What is a Cash Transfer?
A World Bank Report defines Cash Transfers as the provision of assistance in the form of cash to the poor.
The report highlighted that the main objective of this initiative is to reduce poverty in a nation but that it must be done with much care and study, since it has its challenges, advantages and disadvantages.
Some countries, in order to eradicate poverty, have adapted this system. Most of those are oil producers. One such country is neighbouring Venezuela.
The Bolivarian Republic of Venezuela, a country that was known more for its agricultural sector than its oil industry began drilling wells in the 1880s.
However, it was not until after World War I that its oil industry became a grand success and began pumping revenues into the country’s economy. This was in 1922.
As Venezuela approached the 1990s, a new political era began.
During the period from 1990 to the 2000s, the late Venezuelan President Hugo Chavez rose to become a controversial political figure due to the “sparking” of what he called a Bolivarian Revolution.
During his election campaign, he promised citizens of his country to lift them out poverty and to address their social needs.
He eventually won the 1998 elections by 56.4 percent of the votes and became President in the year 1999.
At the time Chavez took office, Venezuela was producing close to 3.1 million barrels of oil per day, which was a heavy boost to the country’s economy. As a matter of fact, an International Monetary Fund (IMF) report dating back to the early 2000s found that oil exports accounted for 99% of the country’s Gross Domestic Product (GDP).
During the beginning years of Chavez’s reign, according to a Stanford University document titled “Venezuelan Oil Unifying Latin-America”, he modified the Constitution to suit his revolution.
In 2005, Chavez began his plan to fulfill the many promises he made to the poor, and Venezuela at large. The first of these was a deal signed between the late president and the then Brazilian President Luis Ignacio Lula Da Silva. The document they signed expressed the necessity of reducing poverty in the region.
In order to achieve this, they agreed to create a programme that will satisfy the needs of their respective countries which entails feeding programmes, housing, health and education.
It was from this period that Chávez began to lavish the Venezuelan citizens with cash from oil revenues. He provided free houses and luxurious apartments for the poor, built schools, public parks (known as plazas) with exercising machines and funded countrywide feeding programmes for students from nursery to tertiary.
Last but not least, he implemented the initiative of “Cash Transfers.”
According to information obtained from a resident of Venezuela, this cash transfer is called “Becado” or “beca” by Venezuelans. They explained that, in order to be eligible for this cash transfer, one would have to mother a bright young student who’s just about to enter university. In certain cases, the cash would be transferred directly to the student.
The Venezuelan resident further explained that there is another cash transfer with the aim of helping poor mothers with young children, or teenage mothers attending school.
This second cash transfer was detailed by a recent world news article from the Economic Times of New York. The article addressed a current problem of teenage pregnancy in Venezuela, its causes and the lack of contraceptives for Venezuelan women in a country of crisis.
The article, titled “Venezuela crisis pushes women into forced motherhood”, states, “During the late Hugo Chavez’s presidency, Venezuela’s government expanded services aimed at helping poor mothers by providing monthly cash transfers. Chavez lavished praise on women and hailed the so-called ‘revolutionary mothers’ who would help promote his vision.”
The same article went on to state “Despite those initiatives, Chavez’s government made only modest advances, at best, in improving contraceptive access. Government data shows that teenage pregnancies continued to steadily increase during his time in power.”
Some Venezuelan sources told this publication that the cash transfers granted were sufficient enough to provide for an entire family monthly.
They even said that sometimes in one family, they were two or three mothers who were eligible for such cash transfers.
“You weren’t required to work,” they said.
They further explained that along with this extra cash, families received a monthly supply of Food called “Mercal”.
The Mercal was bought much cheaper than groceries provided by the local supermarkets or grocery shops.
This Mercal still exists but the name has been changed to “Clap”.
Even though these cash transfers were intended to lift the nation out of poverty, the majority of these projects were funded by banks due to the fact that Venezuela’s oil industry was prosperous.
The charismatic leader Hugo Chavez eventually died on March 5, 2013 and successor Nicolas Maduro took office with the intention to continue his predecessor’s legacy and revolution.
Unfortunately, in the year 2014, oil prices dropped. This shook Venezuela like a tremendous earthquake. Those were compounded by economic sanctions brought against the Venezuelan state by the US government.
The country’s economy which to date is heavily reliant on its oil exports plunged into crisis and Venezuela was left with tremendous debt.
Hyper-inflation took over; the government struggled to keep supplying its cash transfers, its free housing programme and its countrywide feeding programme for students.
Basic goods began to disappear, and Venezuelans rioted in the streets and created chaos, blaming the government and Maduro for not keeping their promises and for the economic downturn of the country.
According to an Economic times article written in August 2019, “Few if any women still get cash transfers except for occasional bonuses equivalent to a dollar or two. Maternal death rates rose over 65% between 2015 and 2016.”
It went on to describe the dilemma of Maduro and the cash transfers like this: “President Nicolas Maduro has struggled to advance his predecessor’s agenda amidst a crippling economic contraction worse than the U.S. Great Depression.”
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