Venezuela's foreign deposits increase to USD 40 billion
At the same time, foreign exchange allocations to the private sector have decreased and the public debt has soared
The balance of payments released by the Central Bank of Venezuela (BCV) at the end of the first quarter shows that government financial authorities have cut authorizations of US dollars for private sector imports, while increasing foreign deposits and public debt.
Amidst overwhelmingly high oil prices between December 2011 and March 2012, the government raised foreign deposits by USD 4.13 billion to USD 40.97 billion.
The BCV said that overseas accounts have swollen due to "to the increased deposits held by the National Development Fund (Fonden), the investment funds backed by Chinese loans, and the deposits held by monetary authorities and state-run companies." The central bank did not elaborate.
While foreign deposits continue to climb, the Foreign Exchange Administration Commission (Cadivi), which is the agency responsible for allocating foreign currency at the official exchange rate, cuts of US dollar authorizations for private sector imports.
According to data published by Cadivi, the amount of US dollars approved for private imports in the first quarter declined 9% compared with the same period in 2011. This shows that the oil boom has barely reached private companies.
Foreign currency drought
Under the mechanism the government has created to allocate foreign currency, Cadivi approves the purchase of dollars and then the BCV sells foreign exchange to companies. However, despite the oil boom, the central bank has not enough cash to meet the requests.
Between December and March, Pdvsa received USD 24.67 billion, but only transferred USD 10.19 billion to the BCV, that is only USD 4 out of each USD 10.
Besides selling US dollars to companies, following authorization by Cadivi, the central bank has to transfer money to Fonden -a fund used by the government for overheads and to repay foreign debt.
As a result, at the end of the first quarter, the BCV held only USD 3.1 billion in cash, the lowest amount in the past 16 years.
Assessment of the public finances for a slightly longer period shows that between the first quarter of this year and the first quarter of 2011 the government foreign currency deposits jumped 66%, from USD 24.61 billion to USD 40.97 billion. In the same period, Venezuela s debt grew at a dizzying pace.
Central bank data show that in this period Venezuela s US-dollar denominated debt climbed USD 10 billion and hit USD 95.55 billion.
Translated by Gerardo Cárdenas
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."