CARACAS, Thursday February 21, 2013 | Update

Venezuela's reserves down USD 2.36 billion so far this year

More US dollars are needed to speed up imports

Allocations of US dollars to the National Development Fund have diminished the US dollar availability for imports (File photo)
Thursday February 21, 2013  10:08 AM
Venezuela's international reserves plunged 8% (USD 2.36 billion) in the first seven weeks of the year, standing at USD 27.37 billion by February 19.

Reserves are mainly comprised by gold. Therefore, there is much less cash available for duly authorized companies to buy US dollars to pay for imports.

In its latest report, think tank Síntesis Financiera said that Venezuela's liquid or cash reserves amount to USD 4.30 billion.

Although Venezuelan authorities will thoroughly review authorizations to buy US dollars in an attempt to avoid over-invoicing, available reserves are not enough to allow a proper flow of imports and, therefore, curb shortages of basic food products.

Under these circumstances, Venezuelan state-owned oil company Pdvsa or the National Development Fund (Fonden) need to sell larger sums of US dollars to the central bank in order to boost the country's international reserves.

It is worth noting that the Central Bank of Venezuela (BCV) is bound by law to transfer to Fonden, a fund administered by the Executive Office, any reserves exceeding the so-called optimum level: USD 26.80 billion.

Should this law continue in force, Venezuela's international liquid reserves will continue falling in the middle run.  

Translated by Jhean Cabrera
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