BCV to be the keeper of projects investment fund

Finance Minister Alí Rodríguez noted that some glitches in the public financial system need to be fixed (Photo: Cheo Pacheco)

Economy
"There will be an investment fund under the reform of the BCV (Central Bank of Venezuela) Law. The cash (reported by President Hugo Chávez in his Sunday's radio and TV show "Aló, Presidente") will go there," said Minister of Economy and Finance Alí Rodríguez Araque.

Chávez said that the BCV will be responsible for funding, not only central government projects, but also the programs of locales and plans of official bodies.

According to BCV President Nelson Merentes, the BCV board will devise a method to grant loans according to "the sectors to be funded." "Sure enough, we will deal with monetary and non-monetary gold; contribute to food and agriculture and other sectors which bolster the economy," he reasoned.

By the end of 2009, USD 233,380,943 will be deposited. The BCV is expected to recover the outlays "with interest rates and terms depending on the project and the sector."

Down payment will stem from "savings in monetary policy. You have a cost in monetary policy and this year we have had a lower cost," Merentes added.

In order to withdraw bolivars from the economy and try to ease the pressure on prices, the BCV sells financial entities 28-day and 56-day notes. This is the centerpiece of the monetary policy.

Last May, the BCV curtailed the yield of its 56-day maturity notes from 12 percent to 7 percent, and from 11 percent to 6 percent for the notes expiring within 28 days.

On August 7th, the BCV had contained, through deposit certificates which make it pay interest rates, USD 10.8 billion. Ending October 23rd, such amount downsized to USD 3.6 billion.

Financial sources have noted that banks stopped renewing deposit certificates to purchase foreign currency denominated bonds issued by state-run oil holding Petróleos de Venezuela (Pdvsa) and the Treasury.

Merentes is certain that the economy has had an inflection point, and will have a better performance in the third quarter compared with the second quarter.

"There was an upward point of inflection; this means that it will be better than the second quarter. Now, we do not know where such point will go."

Inflation, he said, will end this year between 25 and 27 percent.

Reforms
Minister Rodríguez disclosed that a reform of the regulations on the financial system is being prepared and the Public Banking Corporation is responsible for the survey.

"The role of banks, particularly pubic banks should be reviewed. Some aspects need to be corrected. We will begin with state institutions; the rest of the system will be subsequently revised."

He could tell little more about the adjustments. However, the National Assembly is working on the amendment to the Banks Law and the Capital Market Law.

Translated by Conchita Delgado

Mayela Armas H. Víctor Salmerón
EL UNIVERSAL

http://english.eluniversal.com/2009/11/13/en_ing_esp_bcv-to-be-the-keeper_13A3048651.shtml