Financing tourism? The government’s false discourse without dollars to back it up

Financing tourism? The government’s false discourse without dollars to back it up

Published on 22 Mar 2023

Once again, tourism is shown as an engine driven by the Maduro government, but it is surrounded by misinformation because in reality there is not enough gasoline for this sector to be boosted, since the national banks do not lend it anything.

By Ariana Briceño Rojas

With the Caribbean Series about to begin, the Venezuelan government seeks to provide an image of a country that promotes and finances tourism development, however this is false. Tourism in the country continues to be the great neglected of the table at the time of distributing credits.

The Governor of La Guaira, José Alejandro Terán, has been the latest spokesman to promote the idea that tourism credits from the banks are being delivered continuously and abundantly.

“In La Guaira, since 2022, more than $1,610,000 in credits have been delivered”, he said this January 31 in the middle of a conference organized by Banco Venezuela in this entity that will host the most important baseball sporting event in Latin America; but the data provided is far from the numbers reported by the Venezuelan banks.

However, the discourse that tourism is being promoted and will be promoted through the banks is not something that only occurred to the current governor of La Guaira, the discourse comes from higher positions of the Government, starting with President Nicolás Maduro himself and being replicated by his spokespersons and in networks.

Two months ago, on December 1, 2022, Nicolás Maduro, through a broadcast by the State channel, VTV, called upon the private banks to “release the money” for tourism, although he did not specify how they would do it in view of the conditions experienced by the banking sector and the credit restrictions imposed by Sudeban.

The announcement to revive and reactivate the credit portfolio for the tourism sector was made by Maduro from the state of Anzoátegui during the closing ceremony of the XV edition of the International Tourism Fair of Venezuela (FITVen 2022). “Within the economic growth plan we are going to reactivate and revive in a special way the tourism portfolio with credits in international currency”, said Maduro.

His speech not only remained in a television broadcast and among those who accompanied the President in situ, but it was also replicated by the government’s communication apparatus, which amplified Maduro’s words to make people believe that the tourism engine was more fueled than ever.

According to the Probox report, the hashtag FITVENEsDesarrollo that was positioned in the social network Twitter registered on December 1 a total of 507,831 tweets, of which 91.97% came from inorganic accounts, i.e. bots and accounts that only replicate propagandistic content. This means that Maduro’s message of reactivating credits for tourism was greatly amplified.

Tourism does not exist for the banking sector

Despite the fact that Maduro and all his machinery on Twitter implied that the coffers were open for this sector, the reality is different, as evidenced by the latest report of the Superintendence of Banking Sector Institutions (Sudeban), which indicates that Venezuelan banks only have in their credit portfolio for the tourism sector the derisory amount of 1,245 bolivars, which is equivalent to just $55.65.

To have a better idea, this amount represents 0.000009% of the total credit portfolio of the country’s banks, which in itself is extremely small for the high demand for credit in Venezuela ($573 million).

So, the real question would be: Why is the government amplifying the lie of credits to tourism? And where does the governor of La Guaira get the figure of $1.6 million in tourism financing for this region alone?

It is not only tourism. In the last few months, a campaign has been deployed by the government to promote the sensation of a banking reactivation, mainly focused on the entrepreneurial sector, which seeks to create a mirage of an economic recovery that is still far away for a country that has reduced its economy by more than 80% in only 8 years.

Maduro’s government seeks to legitimize itself and generate the sensation of an economic recovery that is far from reality, since according to the most recent economic projections, in a period of constant growth, Venezuela could take up to 52 years to return to its pre-crisis economy.

Terán also pointed out that this was the tenth time that credits of up to US$ 20,000 were being given to 200 representatives of the tourism sector. None of this is reflected in the mere $55 reported by Sudeban.

What “money” can the banks release?

Although the Government creates a discourse in which it asks the banks to “release the money”, there are two problems here. One, the Sudeban keeps the rope on bank credit by demanding a legal reserve of 73% for deposits in bolivars and authorizing only 30% of the loans for deposits in dollars. The second is that, even so, Venezuelan banks have little money to lend.

Regarding the first point, in order to curb inflation, the Chavista government initiated a monetary policy to restrict the circulation of money in the country through what is known as legal reserve. The reserve requirement is the percentage of money on deposit in the banks that the law requires them to keep and that they cannot lend. This money is kept or “encaje” in the Central Bank of Venezuela (BCV).

By 2002, the legal reserve in the country was in the order of 15%, a high percentage for developed countries, but in line with the average of middle-income countries, according to the World Bank. Today, the reserve requirement in Venezuela is 73% and it reached 100%.

The legal reserve requirement of Venezuelan banks far exceeds the percentages established for neighboring countries. The closest country to Venezuela is Brazil with 25% reserve requirements, while Colombia has a reserve requirement of 11% and Peru only 3%.

Secondly, after such a restrictive policy, the banking sector shrank and its activity began to fall, at the same time as the country’s economy did. While in 2012 the credit portfolio in Venezuela was at $32 billion, according to calculations by the financial consulting firm Ecoanalítica, 10 years later the reduction of this portfolio has been 98%. For this reason, there is not enough money to lend.

The banks have approximately $257.4 million (30%) available for dollar-indexed loans and have a bolivar loan portfolio of $573 million. In the hypothetical case that banks could lend the total of 30% of dollar deposits, then the loan portfolio would increase to $761.4 million, which would be close to only 1 point of GDP in loans. Chile’s loan portfolio, for example, represents 88.7 points of GDP.

Analysts point out that the private sector alone needs around $6 billion, four times more than total bank deposits and 12 times more than what banks are currently lending. Therefore, being able to attend to the tourism loan portfolio, which has not been attended to in any way, is complex.

Tourism: The bad guys in the class

Another key point regarding the financing of the tourism sector is that in the case of Venezuela it is not known where to start.

According to the World Economic Forum’s report establishing the Travel and Tourism Competitiveness Index by country, Venezuela found itself in 2021 among the last ten economies in the world in tourism competencies by ranking number 108 out of 117.

If we restrict the study to just Latin America, the result for Venezuela is worse. We are the last country in the region in terms of tourism development.

The results of this index are revealing. On a scale of 1 to 7, where 1 is worse and 7 is better, Venezuela scored 3.1.

There are several key points to evaluate in this study regarding the country’s low competitiveness in the tourism sector: The first is that our infrastructure, both in services and transportation, is below even the 3.1 average of the total index. Therefore, the investment that must be made in this sector is large and does not depend only on credits for inns, hotels or restaurants, but also on the road plans that the government must guarantee.

Although Conseturismo does not have an estimate of how much financing the sector needs to be competitive in the world. The low position of the country shows that investments must be substantial and not only come from the banking sector, but also from government budgets which, like the banking sector, are restricted.

This work is part of the deliveries of the Coalición Informativa “C-Informa”, a Venezuelan journalistic team that aims to confront disinformation and is integrated by Medianálisis, Efecto Cocuyo, El Estímulo, Cazadores de Fake News and Probox with the support of the Consorcio para Apoyar el Periodismo Independiente en la Región (CAPIR) and the advice of Chequeado from Argentina and DataCrítica from Mexico.

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