- Inflation in Venezuela exceeded 230 percent in 2022.
- It is expected that in 2023 it will be even higher since it accelerated again in the first months of the year.
- The strategy to control the general rise in prices has cracks and one of the sectors most affected is that of credits for mass consumption.
Credit cards are almost useless in Venezuela due to uncontrolled and government restrictions.
This is how they assured Reuters sources from banks, economic analysts and consumers themselves.
Among the government limitations, the most complicated for credit card operators is that maximum percentages for card interest were set below inflation, in addition to the limitation of being able to lend only up to 27 percent of the total flow of money they handle. the institutions.
This has made it almost impossible for banks to issue cards since any sale through this means would result in millions in losses.
Although in 2020, with inflation flying through the air, Venezuelan President Nicolás Maduro relaxed a series of controls on the economy, which gave some oxygen to businesses and industries, this did not include bank loans.
“They are useless for absolutely nothing”, “my parents bought electrical appliances and computers with credit cards, that does not exist now in Venezuela”, are some of the comments from consumers in a country that has been struggling for years due to the lack of dollars and reserves and very high inflation.
When the crisis began, the cards were useful for daily purchases in supermarkets and pharmacies, however, credit limits have not been updated and some banks have even removed all options.
Some limits for card purchases do not exceed two dollars per month, something ridiculous and so low that it makes them completely useless.
Venezuela, inflation and useless credit cards
Data from the sector demonstrate this. According to Reuters, of the total loan portfolio of Venezuelan banks, the participation of credit card financing was barely 2 percent (something like 16 million dollars) in December 2022. In 2012, that same data marked 12 percent (and it was already very low).
The problem is that hyperinflation and government regulations have hit the sector so badly that this kind of financing is not a business for banks.
Although there are credit cards that offer monthly limits ranging from 30 to 100 dollars, the cost of the food basket is 370 dollars in Venezuela.
Maduro is trying to apply a more orthodox policy to control inflation with cuts in public spending and anchoring the exchange rate with the injection of dollars in cash in the exchange market, but this implies that the Central Bank orders credit institutions to freeze the 73 percent of the deposits.
Thus, there is not enough available to provide consumer credit.
In 2022, the ionflaicon of Venezuela was 235 percent, the highest in Latin America and will accelerate in 2023.
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