Venezuela’s Bicentenary Bank Launches Third Round of Credits to Boost National Production

The Venezuelan government continued its efforts to expand non-oil sector production on Tuesday by granting 208 million bolivars in low-interest loans to 44 small and medium-sized projects in the textile, industrial construction, agricultural, and paper industries

By James Suggett- Venezuelanalysis.com
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President Hugo Chavez during the credit granting ceremony (PP)
President Hugo Chavez during the credit granting ceremony (PP)

Mérida, June 9th 2010 (Venezuelanalysis.com) – The Venezuelan government continued its efforts to expand non-oil sector production on Tuesday by granting 208 million bolivars ($US 48.4 million) in low-interest loans to 44 small and medium-sized projects in the textile, industrial construction, agricultural, and paper industries.

The loans were given by the state-owned Bicentenary Bank, which the government formed in December 2009 by merging the state-owned bank Banfoandes with three banks that were nationalized during a crack down on banking sector corruption the previous month.

Tuesday marked the third round of credits granted to small and medium-sized businesses since the Bicentenary Bank’s inception. In April, the bank lent 358 million bolivars to 57 projects, and in May it granted 199 million bolivars to finance 41 entrepreneurs.

During a public ceremony for the granting of the loans, President Hugo Chavez said his government seeks to give public banking a new profile as an essential tool for the construction of “21st Century Socialism.”

“The idea is not to give loans to capitalist intermediaries who rob everybody. This is the new economic map that I want us to make,” said Chavez. “We do not want to be a bank that only hands over the credit; we want to accompany the productive process and help you with technology and infrastructure, if necessary,” he said.

The loans have generated 6,278 new jobs over the past three months, helping keep the formal sector unemployment rate to a relatively low 8.2%, according to official statistics.

The government says its strategy of stimulating small and medium-sized producers within a framework of social responsibility laws that prohibit price speculation and hoarding will also help to control inflation by bringing cheaper local goods to the market. 

Inflation showed a monthly variation of 2.6% in May, which is significantly below the 5.2% rate in April. Cumulative inflation has reached 14.2% so far this year, compared to 8.9% during the first five months of 2009.

The government’s strategy also includes the gradual expansion of state-owned production, distribution, and marketing at controlled prices. Following a recent state investigation into the food sector, the government announced the takeover of 18 food distributors for hoarding and other violations of the consumer protection law. It also launched a new Socialist Corporation of Venezuelan Cacao to administer the state’s participation in the Cacao industry.   

In a related anti-inflation measure, the Central Bank of Venezuela took control of all foreign currency bonds trading three weeks ago. Today, it re-opened the market under a tight regulatory framework aimed at halting speculation on the U.S. dollar through international bonds sales.