Venezuela proposes setting commercial bank rates

www.forbes.com Reuters, 02.16.03, 3:50 PM ET

CARACAS, Venezuela, Feb 16 (Reuters) - Venezuelan President Hugo Chavez on Sunday proposed setting commercial bank lending rates for the first time in nearly a decade, following the creation of currency and price controls earlier this month. Chavez said commercial bank lending rates should not exceed 30 percent. He also asked the Central Bank to slash interest rates to help Venezuela's poor, who he said were not offered affordable credit. "I would fix lending rates at a maximum of 30 percent," Chavez said during his state-sponsored Sunday television program "Alo Presidente." "I want rates to be fixed. I want interest rates to be cut and I want the BCV (Venezuelan Central Bank) to fix interest rates," he said. Commercial banks angered the populist president in December by slashing operating hours to support an opposition strike meant to force Chavez from power. The strike continues in Venezuela's vital oil industry, strangling an economy reeling from a 8.9 percent contraction last year. Any decision on fixing rates would have to come from the Central Bank, which is in theory independent but has supported Chavez' recent initiatives -- including currency and price controls strongly opposed by the private sector.