Purchase of gov't bonds spurs Venezuelan banks' revenue by 88%

The purchase of bonds and treasury bills from the Venezuelan Ministry of Finance has been highly beneficial to the banking system.

Official figures show than investments in these instruments yielded USD 1.8 billion in income by the first half of the year, 88% above the figure recorded during the same term in 2011.

Pressured by the gap between income and expenditures, and amid an electoral campaign where Venezuelan President Hugo Chávez is seeking reelection, the Venezuelan Government tries to fill the deficit by contracting debt through the continued sale of bonds and treasury bills to banks.

As income from the purchase of bonds grows, banks have benefited from the expansion in loans amid a domestic economy that has recovered from recession and started to flourish.

After inflation in the first half of the year, total loans soared 29% with respect to 7.7% recorded during the same term in 2011.

Experts assert this is very common in the Venezuelan economy: whenever growth is recorded, loans climb as well, as companies and businesses apply for funding to boost production and meet higher demand.  

vsalmeron@eluniversal.com

Translated by Jhean Cabrera