Archive for November 4th, 2003

The ever shrinking Venezuelan banking system

November 4, 2003

Interesting article in today’s El Universal about the shrinking Venezuekan banking system. A table is presented (barely visible in the Internet version) in which Deposits, Loans, Expenses and profits are compared among various Latin American countries. At the official exchange rate, these were the numbers for Chile, Colombia and Venezuela (all in billions of US$)


                     Chile      Colombia     Venezuela    El Salvador


Loans            46.7           16.2               5.6                5.9


Deposits       39.6            19.1              13.9               6.7


Expenses       1.14           1.16               1.21            0.18


Earnings         .607            .380            .623             .068


What is remarkable about these numbers is that despite the much larger economy than El Salvador, Venezuela only has only twice the deposits of that country and a similar amount in loans. In fact, if the more realistic black market rate of Bs. 2700 per US$ is used (versus the Bs. 1600 per US$ in the article), Venezuela’s numbers are much lower. Note the high costs for the Venezuelan banking system, despite its size. Profits are also quite high, although they are much lower than shown if the black market rate were used. What is clear is that our banking system is not fullfilling its intermediation objective, with an almost factor of three difference bewteen deposits and loans. This is due on the one hand to the state of the economy, but it is also influenced by the attractive rates offered by the Government in its bolivar denominated bonds, which are more attractive to the banks than the more riskier loans. This also helps mantain interest rates quite high. Quite perverse all around.

Government denounces conspiracy

November 4, 2003

While the prevalent theory is that the Venezuelan Government does not believe the opposition will be capable of gathering the required signatures, evidence points otherwise. If the Government was so sure of this it would not be pressing to approve the Supreme Court bill, which would increase the number of Justices in the Court from 20 to 30, it would not be eliminating the First administrative Court, considered to be the most serious Court in the country, but most importantly, it would not make the type of accusations it did today when it accused the opposition of conspiring to overthrow the Government.


The “evidence” of this conspiracy is an illegally obtained wiretap of a conversation between the Head of the Confederation of Unions Carlos Ortega, who is in exile, and his alternate Manuel Cova. In it, Cova and Ortega discuss a range of topics including an alternate plan “B” in case the Government blocks the possibility of the recall referendum and mention the possible rebellion by the people if this were to happen. They then discuss the dangers that such a rebellion may be followed by a dictatorship.


This of course is being shown by the Government as “evidence” that there is a conspiracy to overthrow it. The opposition replied immediately to the charges saying that the Government is looking ridiculous internationally with these accusations, more so, by making them as part of the agreement negotiated in May by the Government and the opposition.  According to the Government, these actions violate the agreement, an agreement that has been repeatedly ignored by the Government since it was signed. In it, the Government agreed to focus on the recall referendum, which it did not follow through, blocking the naming of the Electoral Council in the National Assembly, an issue which was resolved by the Supreme Court naming the Electoral Board in August. The agreement included accepting international technical assistance on electoral matters, which now Chavez MVR refuses to accept. Additionally, one has to wonder where the Attorney General is when the National Assembly, the President in his Sunday speech and now Government representatives make use of an illegally obtained conversation which is forbidden by Venezuelan law. One of those taped, Manuel Cova, has asked that the full transcript be handed in to the Attorney General to show that what was used in public was manipulated out of context.

Government denounces conspiracy

November 4, 2003

While the prevalent theory is that the Venezuelan Government does not believe the opposition will be capable of gathering the required signatures, evidence points otherwise. If the Government was so sure of this it would not be pressing to approve the Supreme Court bill, which would increase the number of Justices in the Court from 20 to 30, it would not be eliminating the First administrative Court, considered to be the most serious Court in the country, but most importantly, it would not make the type of accusations it did today when it accused the opposition of conspiring to overthrow the Government.


The “evidence” of this conspiracy is an illegally obtained wiretap of a conversation between the Head of the Confederation of Unions Carlos Ortega, who is in exile, and his alternate Manuel Cova. In it, Cova and Ortega discuss a range of topics including an alternate plan “B” in case the Government blocks the possibility of the recall referendum and mention the possible rebellion by the people if this were to happen. They then discuss the dangers that such a rebellion may be followed by a dictatorship.


This of course is being shown by the Government as “evidence” that there is a conspiracy to overthrow it. The opposition replied immediately to the charges saying that the Government is looking ridiculous internationally with these accusations, more so, by making them as part of the agreement negotiated in May by the Government and the opposition.  According to the Government, these actions violate the agreement, an agreement that has been repeatedly ignored by the Government since it was signed. In it, the Government agreed to focus on the recall referendum, which it did not follow through, blocking the naming of the Electoral Council in the National Assembly, an issue which was resolved by the Supreme Court naming the Electoral Board in August. The agreement included accepting international technical assistance on electoral matters, which now Chavez MVR refuses to accept. Additionally, one has to wonder where the Attorney General is when the National Assembly, the President in his Sunday speech and now Government representatives make use of an illegally obtained conversation which is forbidden by Venezuelan law. One of those taped, Manuel Cova, has asked that the full transcript be handed in to the Attorney General to show that what was used in public was manipulated out of context.

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