Saturday, October 22, 2005

"the economy has done extremely well" 

Although President Chavez has been talking about Socialism quite a bit recently it has to be kept in mind that Venezuela is still very much a capitalistic economy, albiet with state ownership of some industrys. And in fact, as the Caracas based Daily Journal points out, the capitalists are doing pretty good:

Venezuela’s banks and financial institutions saw a rise in profits in the July-September quarter thanks to higher loan activity despite continued government intervention, an industry report said

Profits in the quarter ending September reached Bs.704.9 billion ($327.9 million; euro 274.2 million), up 33.6 percent from the same three-month period last year, as banks continued to invest in tax-free public debt and stepped up automobile loans, according to a monthly report by Softline Consultores C.A., a banking sector research firm. “Bank profits are up mostly due to higher loan demand, especially loans with no artificially low interest rates dictated by the government, such as car loans,’’ said José Grass, head of Softline.

Under President Hugo Chávez, the government has ordered banks to devote at least 10 percent of their portfolios to the agriculture industry and 3 percent to small businesses at preferential interest rates.
The Venezuelan Central Bank also set fixed interest-rate levels in late April.
Loans outstanding at Vene-zuela’s 49 banks and financial institutions rose 5.6 percent in September to Bs.29.7 trillion ($13.8 billion), from Bs.28.1 trillion in August, the banking consultant said.

Loans to small businesses rose 6.2 percent in September, while farm loans expanded 3.4 percent, Softline said.
“Given the fact that the economy has done extremely well, it would be surprising if lending wouldn’t be expanding now,” Ricardo Amorím, head of Latin American research at WestLB AG, said in an interview.
“The risk of default goes down as economic activity goes up.” Lending has risen as the economy grew and restrictions on foreign currency trading boosted the money supply. Lending rose 77 percent in the 12 months through September.
The economy grew 18 percent last year and 11.1 percent in the second quarter.

Of course, it isn't only interesting to see that they economy has done "extremely well" and that people are requesting, and the banks are giving, long term loans for durable goods which shows faith in the future of the economy. Its also interesting to see that these profits are coming in spite of the financial transaction tax which was imposed by the Chavez government and many in the banking sector have slammed as harmful to their business. Well guess what, the tax is implemented, the government gets the money it needs to function, and the banks still make a handsome profit after all.

Yet another example of Venezuela doing well when Chavez just ignores all the naysayers.


This page is powered by Blogger. Isn't yours?