Caracas Daily Journal (Jeremy Morgan): Venezuela's official reserves continue to rise, reaching $34.168 billion during the first week of this month, up $33 million or 0.09 percent on the preceding week, according to the Venezuelan Central Bank (BCV). Of the total, $33.347 billion was held by the central bank, while a further $821 million was on deposit at the Macroeconomic Stabilization Fund (FEM), which was founded in late 1998 with the purpose of preventing fluctuations in oil export prices from adversely affecting fiscal, foreign exchange and monetary policies.
The FEM is funded from the difference between the crude oil price forecast in the budget and the price actually paid for the oil. With world oil prices hovering in recent times at around $140 a barrel, there's a significant gap for financing the Fund.
Economists note that the reserves would be even higher were it not for a reform of the Central Bank Law under which the state oil corporation, Petroleos de Venezuelam (PDVSA) is not obliged to hand over all its hard currency earnings to the central bank. PDVSA directly contributes several billion dollars a year to the "missions" or social welfare programs founded by President Hugo Chavez.
News of the latest rise in the reserves came as the ranchers' federation, Fedenaga, said government measures to ensure food supplies, encourage self-sufficiency and boost output had been "positive." However, Fedenaga president Genaro Mendez called on the government to broaden its dialogue with food producers and to allow the private sector greater participation. Concerning issues of production and supply, he said, "there hasn't been communication with the ministries, our union isn't called in, we want them to call us to participate."
Domingo Maza Zavala, an economist and former director of the BCV, warned that inflation would continue to rise as long as the country didn't produce enough food and incomes continued to rise.
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