CARACAS Reuters - Venezuelan business owners struggling to get access to credit are seeking loans through foreign banks, business people and finance industry sources, according to foreign sources.
Local banks in the South American country offer few loans to the private sector because of efforts by Nicolas Maduro to lower inflation by increasing foreign cash supply, limiting expansion of credit, reducing public spending and raising taxes.
Large companies in need of financing have begun to seek loans from foreign banks with local partners or connections, according to private sector and finance sources. They said the loans have market-rate interest rates and a high collateral threshold.
Local banks must retain 73% of their deposits in the central bank, which leaves little margin for loans.
One businessman said that industries have to seek options to maintain their operations because loans are costly due to interest and guarantees and that only large companies can seek them. Three sources said that a number of companies seeking credit are from the agricultural sector and need funds to purchase wheat, fertilizers and other goods from abroad.
They said that other businesses looking for loans are focused on the export of food and drink.
Neither the central bank nor the banking regulator responded to requests for comment.
In 2019 the U.S. sanctions are aimed at limiting Maduro's access to financing and not prohibiting private Venezuelan companies from operating abroad.
Two of the sources said that large Venezuelan companies are generally seeking loans for more than $500,000, and that the names of the companies and banks are kept secret for security reasons.
The government transfers the biggest burden of its adjustment plan to the private sector, restricting credit for companies and consumer credit, which affects households, said Daniel Cadenas, economist.
According to July's official figures, Venezuelan banks' credit portfolios total $583 million, but economic analysts say that financing needs for companies are 10 times that and the breathing room provided by loosened currency controls has not led to full economic recovery.
A finance source said that banking has become more transactional rather than giving credit.