2023-10-30 21:17:47
A Venezuelan credit card does not cover, for example, a dinner for two in a restaurant, much less enough to buy an appliance: credit in Venezuela is practically non-existent.
“Most credit cards are used to open a door if it gets stuck, nothing more,” says economist Alejandro Castro to the Voice of America. He explains that “a modern economy has credit to a greater or lesser extent.” In Venezuela, the credit portfolio barely reaches 1.5% of the gross domestic product (GDP), according to private estimates. It is the lowest in Latin America. And “it is around 1 billion dollars, which is equivalent to 1.5% of the size of the economy,” says the expert.
In 2018, the credit portfolio fell to 750 million. The previous year it had been 12,000 million, according to agency reports. At that time, hyperinflation and the depreciation of the bolivar diluted the debts. And although in 2022 the Venezuelan economy experienced a certain rebound, thanks to improvements in oil performance and a relaxation of state control measures over finances, credit never took off.
In Venezuela, most people who have a credit card cannot buy even a bottle of water. “They are of absolutely no use,” says Henkel García, financial analyst and director of the consulting firm Albusdata, to BBC Mundo. And most cards in that South American country have a limit of just 1 bolivar (about US$0.03).
“They are useless,” said Lina Pereira, an administrator who has two credit cards with low limits. “My parents bought appliances and computers with their credit cards. That is like a memory for Venezuelans.”
Angel Alvaradoprincipal investigator in the department of University of Pennsylvania Economics, explains that the main cause behind this phenomenon is the very high inflation rate that the South American country has suffered in recent years. “In Venezuela there is no credit because with an inflation of 400%, there is no credit,” Álvarado tells BBC Mundo.
“Hyperinflation destroys financial intermediation. There are no people saving. Who is going to save in bolivars? If there are no people saving in bolivars, there is no credit. And if there is no credit, there is no credit card,” she points out. In 2017, Venezuela entered a cycle of hyperinflation that lasted four years. According to data from the Central Bank of Venezuela, inflation climbed to an annual maximum of 65.374% in 2018.
The hyperinflationary period ended at the end of 2021, but that has not meant the end of price escalation. In fact, according to estimates from the Venezuelan Finance Observatory for the end of August, the accumulated inflation in the country in 2023 is 144.6%, while the annualized rate (from August to August) amounts to 422%.
According to Henkel García, one of the factors that has led to the unusability of credit cards in Venezuela has been, precisely, the struggle to control inflation. “Starting in 2018, when it was dealing with hyperinflation, the government took the policy of containing the advance of prices and the exchange rate, literally making the bolivars created through the granting of credit disappear. “That practically meant the disappearance of credit in Venezuela and, above all, consumer credit.”
As a consequence of these circumstances, credit cards currently only represent 1.8% of all the money lent by financial institutions in Venezuela, according to figures from the Superintendency of Banks (Sudeban), corresponding to March of this year (last available data). In 2012, they represented 12% of all loans. In March of this year, all the credits granted in Venezuela in this way amounted to about 391,106,966 bolivars, which was then equivalent to about US$16 million.
Currently, although a few users have higher credit limits than the majority, equivalent to between US$30 and US$100, these are meager amounts in a country where the family food basket required for a family of five is located over US$500 a month, according to figures from Cendas, a study center on economic and social issues.
last News
19 mins antesoctubre 30, 2023
34 mins antesoctubre 30, 2023
40 mins antesoctubre 30, 2023
1 hour before October 30, 2023
1 hour before October 30, 2023
Events
Policy
National
#Credit #Venezuela #Virtually #nonexistent