Central Bank expands cash reserves

The Central Bank of Venezuela's balance sheet shows that it increased US dollar reserves at the end of the second half of 2011. The government uses cash reserves to pay imports and external debt service.

After the sale of part of Venezuela's bond portfolio, cash reserves heightened by 174% compared to June 2011 and amounted to USD 4.68 billion.

While the increase is significant, the amount of cash reserves remains low in an economy that is more and more dependent on imports.

Venezuela's international reserves have dramatically changed, particularly in the share of gold ingots in international reserves; now, they account for 66.7% of total reserves.

Venezuela has the highest ratio of international reserves backed by gold in Latin America. However, the BCV has not bought new ingots over the past five and a half years, and the price of gold has skyrocketed amid the global economic crisis.

Between 2005 and the first half of 2012, the price of gold has surged more than three-fold from USD 492.27 an ounce to USD 1,696.33 a troy ounce.

Throughout this period, gold ingots that are part of international reserves have risen only 2.5% to 365.8 tons, but thanks to increasing gold prices, it now accounts for 67% of total international reserves relative to only 19% in 2005.

vsalmeron@eluniversal.com