MAYELA ARMAS H.
EL UNIVERSAL

President Hugo Chávez' government has asked the Central Bank of Venezuela (BCV) for a new transfer of surplus official reserves to the executive branch, and now the Central Bank has the last word on such transaction.

"The government filed the petition. Now, the Central Bank has to give a response. The directors of the bank will review the relevant legal framework and determine whether this transfer of reserves can be made or not," said Rodrigo Cabezas, president of the National Assembly Finance Committee.

Last February 2nd, Chávez suggested BCV was about to deliver USD 4 billion in surplus reserves to the executive branch.
 
Under the amended law governing BCV, this bank is supposed to make a yearly assessment on the optimal level of reserves. Under the new law, the distribution of oil revenues was modified too. Now, the only contribution in US dollars state oil holding Pdvsa has to make to BCV is tax payment. Pdvsa has to deposit the remaining oil revenues in US dollars in the so-called National Development Fund (Fonden.)

It was established that BCV would make a first transfer from official reserves to Fonden for USD 6 billion. This operation took place in the second half of 2005.

This sort of transfer was supposed to take place only that time. Chávez' new demand for reserves is not set forth under the amended law, but Cabezas stressed that the term "optimal level of reserves" is not a decoration. "Constructions can be made from that."
 
Cabezas then suggested that the National Assembly has not been advised of any changes to the law governing BCV.

Earlier this week, Armando León, director of BCV, declared that Chávez' petition has to be assessed in the light of the new BCV law. "The amendment introduced a concept called optimal reserves. I think that based on this concept we should study the words of the President of the Republic," León added.

According to Chávez, Fonden has now USD 7.9 billion, comprised of USD 6 billion from official reserves and USD 1.9 billion from Pdvsa deposits. From Fonden total funds, around 50 percent (USD 4.095 billion) has been earmarked for state projects involving infrastructure, road design and maintenance, electric systems and incorporation of companies. But beyond these projects, another portion of funds (USD 3.1 billion) has been earmarked for the purchase of Argentine bonds and related credit notes.

Chávez' administration has a goal to increase Fonden funds by USD 10 billion. Around USD 6 billion would come from Pdvsa, while BCV is expected to deliver USD 4 billion.

Translated by Maryflor Suárez R.