BOA: Central Bank cash reserves are the lowest since 1997
According to Bank of America, the Venezuelan government has troubles with the allocation of foreign exchange
Although the price of Venezuelan oil averages USD 112, this windfall oil revenue is still not reflected in the international reserves that amounted to USD 26.2 billion in May 11.
The assets held by the Central Bank of Venezuela (BCV) at the beginning of 2012 amounted to USD 29.8 billion and they have sunk by USD 3.6 billion so far this year particularly due to transfers made to the National Development Fund (Fonden).
In its latest report on Venezuela, Bank of America estimated that Venezuela's cash reserves have fallen to USD 2.7 billion, the lowest level since 1997. The US bank stated that the government has had troubles to provide foreign exchange to the local market (private sector) due to this small amount of operating reserves.
Meanwhile, the last report of online weekly financial bulletin El Tesorero also said that oil revenues are insufficient to expand the supply of foreign exchange through the Foreign Exchange Administration Commission (Cadivi). According to Venezuela's forex board, US dollar allocations for regular imports slipped 19 % at the end of the first quarter of the year compared with the same period in 2011.
The weekly bulletin deems it necessary to raise the share of foreign exchange received from oil exports in Venezuela's international reserves, since the Central Bank of Venezuela's assets are below the appropriate level, which is estimated at USD 26.8 billion.
In view of the shortage of foreign currency, the BOA report questions the government's unwillingness to transfer its dollar positions held in parallel funds (National Development Fund, and Chinese Fund, among others) to Cadivi. According to estimates, the Venezuelan government has USD 36 billion in these funds.
José Vicente Rangel clearly said: "We are not conducting negotiations threatened with a gun in the head." He warned behind closed doors in the midst of the social upheaval occurred during the oil strike in 2002 and 2003. Dissenting Timoteo Zambrano answered back that no other option was available: "The thing is that otherwise, you do not negotiate."