How many billions will it cost to rebuild Venezuela after earthquakes, and who will foot the bill?

To date, the amounts announced by the Venezuelan government, countries and multilateral organizations willing to help are far below what experts estimate is necessary for the country to recover from the damage caused by the earthquakes. The uphill battle has just begun. How much will it cost to rebuild Venezuela The level of destruction caused by the double earthquake is so great that it is still difficult to estimate not only the extent of the damage, but also how much it will cost to rebuild the affected areas: the capital, Caracas, and the states of La Guaira, Carabobo, Miranda, Yaracuy and Aragua. In addition to the lives lost and the injuries suffered by thousands of survivors, there is the enormous material damage. There is still no complete survey, but the images of dozens of collapsed buildings and roads split in half in the State of La Guaira give an idea of ??the catastrophe. Initial estimates from different institutions and experts vary, but they all indicate that the effort to rebuild the affected areas will be gigantic. The United Nations Development Program (UNDP) estimated direct physical damage at US$6.7 billion (around R$36.2 billion). Based on satellite images, the agency calculated the number of structures in the areas affected by the earthquakes and highlighted that the estimate could fall to US$4.7 billion (approximately R$25.4 billion) or rise to US$8.7 billion (approximately R$47 billion), mainly due to losses in housing and other assets. Still, the value does not include all damage to infrastructure or the cost of long-term reconstruction. In a statement, the UNDP said that, as new information is gathered, estimates of the total impact should be revised. According to the agency, this impact usually varies between 1.5 and three times the value of direct damages. If the estimate of US$6.7 billion is confirmed, it would be equivalent to around 6% of Venezuela's Gross Domestic Product (GDP, the sum of all goods and services produced in the country), according to the UNDP. But other projections are even higher. Venezuelan economist Asdrúbal Oliveros estimates that the cost of reconstruction should be between US$12 billion and US$15 billion (between approximately R$64.8 billion and R$81 billion), including housing, infrastructure, commerce, transport and logistics among the most affected sectors. Alejandro Grisanti, from the Venezuelan consultancy Ecoanalítico, told BBC News Mundo, the BBC's Spanish service, that his initial estimates indicate that the total cost of reconstruction will be around US$20 billion (around R$108 billion). When the rescue operations end, Venezuela will face the challenge of reconstruction Getty Images via BBC Venezuela's challenges The first phase of the emergency required an intense operation to rescue people trapped under the rubble and treat the injured. It was also necessary to shelter the thousands of people who lost their homes, in addition to guaranteeing food and transportation for the homeless. Another task, perhaps the most painful, is identifying the dead and providing assistance to orphaned children. In the coming weeks, the focus should turn to assessing the damage and starting to rebuild roads, the electrical network and homes. And, according to experts, international help will be essential. The earthquakes worsened the situation in a country whose economy was already facing years of difficulties. This scenario contributed to Venezuela recording one of the largest migratory waves in recent decades. According to the Andrés Bello Catholic University in Venezuela, Venezuelan GDP shrank by more than 70% between 2014 and 2021 due to the effects of falling oil production, fiscal imbalances and hyperinflation. Even before the earthquakes, the UN World Food Program estimated, in its most recent report, that more than 5 million people needed urgent food assistance in the country. Grisanti, from Ecoanalítico, told BBC News Mundo that, "although it is necessary to thank the international solidarity shown in the first moment, with the sending of rescue teams, the amounts announced to help Venezuela rebuild are far from what will be necessary". Aerial images show the scale of the destruction in La Guaira. Getty Images via BBC What resources have already been announced The acting president of Venezuela, Delcy Rodríguez, announced that the government will allocate US$200 million (about R$1.08 billion) of resources from the International Monetary Fund (IMF) already allocated to the country. She also reported that the President of China, Xi Jinping, ordered the sending of US$17 million (about R$92 million) to help Venezuela. The United States government has promised more than US$300 million (around R$1.62 billion) in direct humanitarian aid to the South American country. The United Nations Central Emergency Response Fund immediately released US$15 million (around R$81 million) for Venezuela. Other countries and various organizations also announced help. The limits and obstacles of aid Even adding up all the resources announced so far, the value is far below the tens of billions of dollars that, according to experts, will be needed to rebuild the country. "The first figures announced for international aid were modest," said Grisanti, from Ecoanalítico. Tamara Herrera, from the consultancy Síntesis Financiera, told BBC News Mundo that "the challenge of reconstruction adds to the economic problems that Venezuela has been facing for years." Economists agree that the Venezuelan government is unable to bear the cost of reconstruction alone. "The country does not have the capacity or access to international financing and is now forced to look for solutions without knowing how or when they will arrive," said Herrera. In addition to being insufficient, the resources announced so far are faced with doubts about the Venezuelan authorities' ability to manage them and the negative image of the Chavista government in many countries, which could discourage international donors and investors. "When there is so much distrust and so many allegations of corruption, it is natural that the international community's first reaction is caution," said Grisanti. "The Venezuelan state's lack of transparency and doubts about its legitimacy make it difficult to obtain the international aid that the country will need." Another obstacle is Venezuela's difficulty in obtaining credit. The country's public debt has technically been in default since 2017, when the government failed to honor payments on the bonds it had issued. Since then, Venezuela has lost access to international credit markets and accumulates a debt estimated at around US$170 billion (approximately R$918 billion). Sanctions imposed by the US also make access to external financing difficult. This week, Delcy Rodríguez stated that Venezuela is negotiating with the US and the IMF to recover resources to rebuild the affected areas, but there are still no defined dates or values. In May, the IMF announced the resumption of relations with the Venezuelan government and said it would begin talks to reestablish its supervisory activity in the country. The organization highlighted, however, that this rapprochement "does not imply immediate financing" and that it will be "a process". During the pandemic, Venezuela stopped receiving the extraordinary resources that the IMF made available to countries to face the health crisis. At the time, the organization stated that it could not determine which was the country's legitimate government. At that time, the US and its allies recognized opposition leader Juan Guaidó as interim president of Venezuela. But since then a lot has changed. Nicolás Maduro was captured in Caracas and taken to New York in a US military operation on January 3 of this year. His vice-president and main ally, Delcy Rodríguez, assumed the Presidency and now governs with the explicit support of American President Donald Trump. The IMF does not rule out granting aid to Rodríguez's government. Given recent history, it is likely to require a strict oversight plan and compliance with a series of conditions. And, if the resources are released, it will be necessary to manage them transparently and define priorities between the different needs of the affected regions. "In other catastrophes of this type, an independent authority was created to guarantee efficient and organized management of resources. This is a formula that could be adopted now", proposes Grisanti, from Ecoanalítico. Even if this happens, another challenge will be having qualified professionals to carry out the reconstruction. "The government faces limitations in human capital, and the country is coming from years of economic decline, ethical deterioration and sanctions," said Herrera, of Síntesis Financiera. For Herrera, the situation faced by Venezuela, which could mark the coming years, can be summarized as follows: "We are facing a weakened and protected State, which today is unable to respond adequately. Therefore, coordination with the rest of society will be essential."