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Economic improvements ease pressure on access to food

  • Key Message Update
  • Venezuela
  • January 2024
Economic improvements ease pressure on access to food

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  • Key Messages
  • Key Messages
    • The recent stability of the local currency (VED) has improved access to food for poor households who receive incomes in VED and are more vulnerable to price fluctuations. Typical government aid, coupled with the new social vouchers paid to public workers—who account for 21 percent of national employment—is expected to help reduce livelihood protection deficits and the number of households facing Crisis (IPC Phase 3) food security outcomes until February. However, high prices will continue to put pressure on the purchasing power of poor households over the coming months. These households will likely resort to coping strategies indicative of Stressed (IPC Phase 2) food insecurity, such as reducing the quantity or quality of the food they consume. The Capital District and peri-urban areas of states bordering Colombia are of greatest concern. 
    • From March to May, a moderate number of the poorest households are expected to transition from Stressed (IPC Phase 2) to Crisis (IPC Phase 3) food insecurity due to changes in the coverage of social programs and the increased impact of public spending on inflation. In the most likely scenario, Venezuela's oil and mineral export licenses will expire in April, which could translate into reduced public revenues and, therefore, decreased social spending. This will likely amplify the typical seasonal decline in benefits to poor households. In addition, the remaining government spending will contribute more substantially to inflation. Poor households outside of Caracas in the Capital District, Guárico, Barinas, and the states bordering Colombia (Apure, Zulia, and Táchira) face a higher risk of increasing livelihood protection deficits. However, the residual price stability is expected to help mitigate the number of households affected.   
    • According to the Central Bank of Venezuela (BCV), monthly inflation decreased from 3.5 percent in November to 2.4 percent in December but remains high. Increased public revenues from tax collection and oil exports due to the reduction of sanctions have favored economic growth. However, Venezuela's oil production was lower than expected, so the impact on the gross domestic product (GDP) will likely be more moderate than the official projections. 
    • Weather conditions have been mixed, with continuously dry weather in some regions. However, this is not expected to affect food availability. In January, rainfall will likely decrease in most of the country and could be between 20 and 30 percent lower compared to the historical average in the Western Plains, the Central Plains, and the central region of the country. Small-scale farmers who depend on rainfed agriculture will be the most impacted by the reduced rainfall and may experience decreased crop yields, especially for water-intensive maize. This could further strain their purchasing power during and after the second harvest. However, the USDA anticipates that commercial maize and rice production will grow by 37 and 25 percent, respectively, in 2023/24 compared to 2022/23.

    Recommended citation: FEWS NET. Venezuela Key Message Update January 2024: Economic improvements ease pressure on access to food, 2024.

    This Key Message Update provides a high-level analysis of current acute food insecurity conditions and any changes to FEWS NET's latest projection of acute food insecurity outcomes in the specified geography. Learn more here.

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