From the Mexican Loan Scam to the EmprendeBDV Trap: The Irony of Revolutionary Usury
By: Veladina
In 1999, Venezuela was experiencing not only political but also financial turmoil. Hugo Chávez, fresh in power, and his political movement raised a banner that resonated deeply with the middle and lower classes: the fight against private banking usury. Public enemy number one was the so-called Index-Linked Loans or Mexican Loans, a mortgage system that adjusted the owed capital to inflation, making debts unpayable and eternal.
The official discourse, later continued by Nicolás Maduro, demonized the greed of bankers—with legal justification, ratified by the Supreme Court in 2002—who applied compound interest and suffocated the people. The promise was clear: never again would banks oppress the worker.
Twenty-five years later, irony sits at the teller window of the country's largest bank. But it is no longer a neoliberal private bank; it is the Bank of Venezuela (BDV), a state entity. Today, under the banner of entrepreneurship, the government offers digital loans that, when analyzed with a financial magnifying glass, make the old bankers of the 90s look like apprentices in the art of capital extraction.
The EmprendeBDV Mirage
The EmprendeBDV program is marketed as salvation for small merchants trying to survive in a de facto dollarized economy. However, the cost structure of these loans reveals a practice that, had it been applied by private banks in 1999, would have triggered immediate expropriations on national television.
Recurring user complaints are alarming: upon requesting a loan, the entrepreneur encounters a devastating mathematical surprise. According to user reports, the scheme works as follows:
Disguised Indexing: Although loans are liquidated in Bolivars, they are indexed to the Credit Value Unit (UVC) or directly tied to the Central Bank dollar rate. In other words, the same indexation that Chávez criticized in the 90s is now state policy to protect itself from the very inflation the State has failed to control.
The Interest: An annual rate of around 16% is set. Up to this point, it seems like a manageable rate compared to inflation.
The Big Hit (The Flat Commission): This is where the aggravation lies, surpassing the nightmares of past mortgage debtors. At the moment the loan is liquidated, the Bank of Venezuela automatically deducts a percentage that, adding up commissions for financial study, advisory, or flat fees, touches 16% of the total approved amount.
The Mathematics of Suffocation
To understand the severity, let's use a simple example. If an entrepreneur requests the equivalent of $1,000 to buy merchandise:
The bank approves the $1,000.
It immediately deducts nearly $160 (16%) for commissions and administrative/advisory expenses.
The entrepreneur receives $840 in their account.
However, they owe the bank $1,000 plus 16% annual interest on that $1,000.
This raises the Effective Annual Rate to stratospheric levels. The entrepreneur is paying interest on money they never touched ($160) and, furthermore, must generate immediate profits exceeding 32% (16% upfront + 16% interest) just to break even with the bank, not counting the daily devaluation of the Bolivar if they fail to rotate the merchandise quickly.
Who is the Usurer Now?
What in 1999 was called financial terrorism when done by private entities is today called boosting the entrepreneurial engine when done by the State.
The irony is biting. Chavismo came to power promising to eliminate the financial traps that enslaved the debtor. They criticized that the principal of the debt grew via indexation. Today, not only does the capital grow with the dollar, but the State applies an initial 16% bite that decapitalizes the entrepreneur before they can sell their first product.
Charging such a magnitude of commission in advance is not social banking; it is an entry barrier guaranteeing that only those with speculative profit margins can survive the loan. It is, in essence, a modern and digitized version of the very system they swore to destroy, but with the aggravating factor that the creditor is the same entity that should be protecting the citizen: the Venezuelan State.
The ghosts of indexed loans did not disappear; they simply moved to the Bank of Venezuela's digital platform, changed their name, and raised their fees.
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