International reserves up 12% in four days

In a move that anticipates enlarged allocation of dollars for imports or a new transfer of foreign currency to the National Development Fund (Fonden), international reserves have been 12.4% firmer over the past four years, from USD 25.23 billion to USD 28.39 billion.

Reserves are the deposit of foreign currency held by the Central Bank of Venezuela to cover imports and pay the foreign debt.

Most of the reserves, around 70%, are composed of gold bars. Therefore, the recent growth refers to the foreign currency in cash that the BCV can use to cope with growing imports and prevent shortage ahead of the presidential election next October 7.

Based on the Treasury report prepared by think tank Síntesis Financiera, international reserves in cash in the hands of the BCV stand at USD 5.3 billion, or 1.2 months of imports.

Another transfer

Nevertheless, the government may use higher international reserves for different purposes other than speeding up imports.

As a result of a wide array of legal reforms, whenever the BCV is in possession of international reserves for an amount larger than USD 26.80 billion, the Executive Office may request it to transfer the surplus to Fonden, a fund used by the administration of President Hugo Chávez to back several projects.

vsalmeron@eluniversal.com

Translated by Conchita Delgado