Close
VENEZUELAN ECONOMY 

The private sector in Venezuela 

Pasqualina Curcio

Ultimas Noticias | April 26, 2021

There are many myths about the private sector in Venezuela, the best known is the one that refers to its unquestionable efficiency. The following phrases are part of this mythology: “unlike the public sector, which is inefficient and corrupt, the private sector is the only guarantee of development” or “the only one that could get us out of this crisis is the private sector, and if it is foreign, big and transnational better still ”or“ the only way to overcome poverty is with foreign private investment ”. In Venezuela, the most popular myth of these times is the one that is summarized in the following phrase, which is repeated tirelessly by neoliberals: “The blame for the current economic crisis lies with the Bolivarian revolution that dismantled the private sector with expropriations and controls ”.

Economic history, facts, and above all numbers alone dismantle these tales. There is no country that has given more incentives, benefits and concessions to private capital than Venezuela, and yet it is the most parasitic that has ever been seen. We clarify that when we refer to private capital we do not do so thinking about the winemaker, or the small businessman, although we are aware that bourgeois is bourgeois and although the labor-capital contradiction is always present, we are referring above all to large companies, to the monopolies and the transnationals that have always been and continue to be in our country.

It is not precisely the private sector that has generated, with its exports, the foreign exchange in Venezuela. Since the oil industry was nationalized in the 70s, it has been the public sector that has guaranteed the income of 95% of the foreign exchange. The private sector has barely exported 5% of the total, which shows its inefficiency. Not satisfied with this, it has appropriated more than half of said foreign exchange from oil exports: from 1976 to 2014 (last figure published by the BCV) the private sector has received US $ 695.026 million at a subsidized exchange rate by the state.

Despite all this amount of cheap foreign currency, the private sector, instead of increasing its investments, decreased them by 75%: in 1977 private investment represented 24% of GDP and in 2014, 6% (BCV data). Roughly more than half of that money, some $ 350.000 billion, is in tax havens.

According to data from the BCV, between 1976 and 2018 private foreign investments amounted to just US $ 57.562 million, that is, not 5% of the income from oil exports during that period. Incidentally, they repatriated profits of US $ 125.103 million, 2,2 times more foreign exchange than they brought in for investments. Nobody believes this story that it has been thanks to foreign private investment that our economy has grown 160% since the 70s. On the contrary, what big capital has done has been to take away our oil revenues.

One of the many things that imperialism does not forgive Chávez is the control of the administration of foreign currency: before 2003, currency that entered, currency that leaked, the private sector appropriated 103% of what entered the country (including money from foreign debt) also with a fixed and cheap exchange rate. After 2003, the year in which the control of the administration of currencies began, and until 2018, that 103% was reduced to 40%, still very high considering that they totaled US $ 426.488 million (BCV data).

With that 60% of the foreign exchange that the bourgeoisie did not take after 2003, the State increased public investment and spending 275%: in 2003 it was 12% of GDP and in 2014 it was 45%, which allowed it to cover a large debt social, strengthen public services of health, education, housing, transportation, reduce poverty 57%, free the people from illiteracy, improve nutrition levels, etc.

Another incentive for the private sector has been taxation. Entrepreneurs in Venezuela do not pay taxes. Historically, the tax burden of income tax has not exceeded 2% of GDP in our country, in other latitudes it is greater than 20%. For their part, companies with foreign capital do not pay even half, they are exempt by the treaties against double taxation. They are supposed to pay in their countries.

As for the myth of expropriations and the dismantling of the private sector, we must say that, according to INE data, for 2008 (latest published figures) of the 28.222 economic units corresponding to industrial activity, only 1,2% were in In the hands of the public sector, the remaining 98,71% belonged to the private sector. Regarding the commercial and services activity, 0,12% and 0,88% respectively belonged to the public sector. Industry, commerce and services remain mainly in the hands of the private sector.

What they also do not forgive Chávez is that he has reversed the privatizations that were carried out in Venezuela during the neoliberal period, particularly those referring to strategic sectors for the security and integral defense of the Nation: electricity, telecommunications, water, ports, airports, airlines, oil, gold and steel. Chávez did not expropriate those companies, he reversed the privatizations that took place in neoliberal times. These companies were state-owned before the 90s.

In revolution, and according to data from Asdrúbal Baptista, the profit rate of the private sector in Venezuela increased 144% between 2003 and 2008, going from 5% to 22%, registering the highest historical levels since 1970.

Even in an economic war, despite the economic blockade and the attack on the bolivar that has resulted in hyperinflation, the private sector has not stopped earning or taking oil foreign exchange. According to BCV data, the private sector has repatriated (taken out of the country) US $ 46.109 million in earnings between 2013 and 2018.

It is not true that the private sector in Venezuela was dismantled, on the contrary, it has enjoyed all kinds of incentives to the point that the only thing missing is to give them, on a silver platter, or rather, on a red painted carpet, part of our territory so that, in a special way, they approve their own laws in those areas, trade with their own currencies, establish their own financial and banking system, have their own legal system and courts while they appropriate our oil, gold, coltan , minerals, fishery resources. All riches that they would export / extract directly through a port infrastructure perfectly equipped by the Venezuelan State for such purposes.

Perhaps having been so condescending with said private sector, an accomplice and main actor in the economic war, has prevented not only the most rapid advance towards socialism of the 350.000st century, but also the fact that Venezuelans cannot dispose of the US $ 25 millions that belong to us, which now rest in the bank accounts of the transnational private sector and which are equivalent to XNUMX times what was invested to rebuild all of Europe after World War II.

SOURCE: https://en.ultimasnoticias.com.ve/news/economy/the-private-sector-in-venezuela-pasqualina-curcio/

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Back to top
%d bloggers like this: