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Idle Land of Failed Banks to Go Towards Public Housing in Venezuela

Mérida, May 16th 2011 (Venezuelanalysis.com) –  As part of the solution to the country’s serious housing shortage, the Venezuelan government will take over 210,000 square meters of land as a first step to utilising idle land that belonged to collapsed banks of the 1970s and 1990s.

Yesterday President Hugo Chavez announced on national television that he was authorising Fogade, the national Deposit Guarantee Fund, to transfer 78 plots of land with a total size of 129,053m2 to the state. The land, located in Tocuyito, Carabobo state, was being administered by Fogade.

Also in Tocuyito, he authorised the expropriation of a further 232 plots with a total size of 82,000m2, which are currently abandoned and which were owned by Banco Nacional de Descuento, a bank that no longer exists but in which the process of liquidating its assets hasn’t been completed. Its liquidation began in the late 1970s as a result of an industrial bank crisis.

The government wants to do the same thing with other abandoned land assets, of other collapsed banks, most from the 1994 financial crisis.

In 1994 to August of 1995, 17 of 59 of Venezuela’s commercial banks collapsed. The crisis is generally blamed on financial liberalisation in the early 1990s, lax banking supervision, and a collapse in oil prices which led to reduced government spending and a weakened economy. At the time, Fogade guaranteed deposits of up to $24,000 per person.

“It’s not justifiable that Fogade still has land that is in a process of liquidation, that they don’t finish the process, I’ve asked the fund’s board for the balance of all the land and buildings that it has as a result of past bank crises and liquidation processes that it hasn’t finished off,” Chavez said.

“For cases like this, expropriation is the formula that the president of Fogade, David Alastre, has proposed to me, so I’m taking these measures so that the land can go towards urban development, through the Great Housing Mission,” he said.

“I insist on the importance of speeding up the rescuing of land in urban and periphery areas of the cities,” Chavez said.

“There are spaces for agriculture, hectares for industrial use, land for housing... we should be constructing micro-cities,” he added, suggesting the idea as a partial solution for decreasing the population density of Greater Caracas.

The government launched the “Great Housing Mission” last month as its seven year plan to tackling the serious housing shortage in the country. One facet of the mission is finding and acquiring land for housing, and another is creating a nationwide register of all those who need housing, which it began this month.

The government will be providing subsidised housing to families, with the size of the subsidy based on the family’s income. Those with insufficient income will receive a 100% subsidy, until their situation changes, those whose family only earns one minimum wage in total, will receive an 80% subsidy, and so on, down to those who earn four minimum wages, will receive a 20% subsidy.

According to the minister for housing, Ricardo Molina, most families earn around 2 minimum wages, with 80% of families earning at least more than 1 minimum wage. As of yesterday, according to the government, 496,908 families, which translates to 1,656,848 people, have registered in the mission. This month, hundreds of tents have been set up in five states to receive registrations, and the registrations will continue in other states next month and in July.

Published on May 16th 2011 at 10.04pm