Puebla, Mexico, March 11, 2016 (venezuelanalysis.com) – The Venezuelan government announced Thursday the creation of a new bank to help small businesses obtain raw materials and basic goods, while vowing to provide local industry with billions of dollars of new foreign currency supplies.
The National Bank for the Supply of Small and Medium Industries (PYMIS) will improve access to basic supplies for Venezuela’s smaller businesses, according to a statement from the president’s office.
In a separate announcement, President Nicolas Maduro said he had approved US$230 million in funding for raw materials bound for domestic factories manufacturing sanitary products such as diapers. Venezuelan consumers have intermittently faced shortages of sanitary products.
According to Maduro, the new funding was obtained through the joint China Venezuela Fund.
Both PYMIS and the new raw material funding were approved under legislation passed by Maduro with decree powers. Maduro currently has special powers to pass economic legislation without the National Assembly.
The special powers were granted to Maduro in February, after the president announced the country was facing an economic emergency.
Maduro’s latest economic measures came a day after his Vice-President for Economy Miguel Perez Abad unveiled a package of reforms to Venezuela’s foreign currency exchange regime.
Under the reforms, the government will sell US dollars to domestic industry for BsF10 to the dollar for importing priority goods like medicine. The government also said it had overhauled its non priority exchange system with a floating rate that opened at 206.92 bolivars per dollar.
Since Maduro was elected in 2013, his government has struggled to reform the country’s controversial controlled exchange system. Local businesses have long complained the system doesn’t provide enough foreign cash to cover import costs, and previous rounds of reform have been dismissed by Maduro’s political opponents as ineffective. Over the past three years, the government has announced four major rounds of exchange reform.
However, Perez said the latest changes will deliver for business.
“This is a system that recognises the market,” Perez said during a Reuters interview on Thursday.
He argued the reforms will see between US$5.5 billion and US$7 billion in foreign currency dolled out to domestic industry.
“(This) is designed to meet social needs, but also to meet the needs of the real economy,” he said.