Crystallex International

The decrease of 3.8 tonnes of gold in the coffers of BCV reactivates the alarm about the country's finances. Experts say not only be due to liquidity problems in the national accounts, but the return of bullion was not a wise decision.

Maria Ramirez Hair
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The BCV repatriated gold is an asset that can be done only liquid through sale. File Photo

Economist Efraín Velásquez, president of the National Economic Council, said that being slight reduction does not represent a financial risk.

However, he warned that if this strategy remains is a sign that the liquidity position of Venezuela is limited, and that "the proper management of international reserves is not commensurate with the liquidity needs of the country and that decisions surrounding the repatriation of gold were drawbacks to Venezuela. "

Angel Garcia Banchs? @ Garciabanchs: As we noted a plethora of times, additional liquid funds to reserves of $ BCV no # liquidaneloro

Jose Guerra? @ JoseAGuerra: "I have repeatedly warned. The reserves of the BCV scarce. From there they are selling gold. "

Benjamin Scharifker? @ Bscharifker: "The BCV is accountable for 5.5 Ton decrease in gold reserves, are all Venezuelans, not the government."

"What appears in the record is a small reduction in Venezuela's gold positions, there was a physical reduction would have to know what had happened, but it appears that this portion was sold gold positions. This may occur as a result of problems with short-term liquidity. "

The specialist said that in this case becomes an illiquid asset-placed gold in Venezuela-liquid and thus can make payment of an obligation.

This situation, said Velasquez, has several readings. One, the national financial liquidity is low and this forced the decision to sell the gold and, secondly, to repatriate Venezuela's gold positions to the vaults of the Central Bank was not the best decision.

"The gold deposited in the Bank of England can be seen as a quasi-liquid asset that can be used as collateral for a credit transaction. When deposited in the BCV the only way to obtain liquidity is selling, not hipotecándolo ".

Negative Signal
Econometric director, Ángel García Banchs, agreed that the sale of gold reserves shows that the Executive requires currency. "Foreign exchange reserves are basically zero and so are selling gold."

He explained that central banks typically make purchase and sale transactions with gold, "the problem is the signal you send". "The Central Bank sold gold and bought Chinese foreign exchange reserves, but has the world's biggest, not to worry. Now, Venezuela has not sold foreign currency reserves and gold gives a very clear signal that is exacerbated shortages of foreign exchange. "

He agreed that the amount of sales is low (400 million dollars), but the Central Bank has no restriction on these operations, "only to have to report to the National Assembly."

He said the funds as the National Development Fund (Fonden), who have been placed as a symbol of financial strength by the National Executive, exist only from the accounting point of view but not real, "are spending money, no savings ". "These funds are accounting for the need to square the balance of payments with the change in international reserves."

Financial Control
Board Chairman of National Economy, Efrain Velasquez said that the government should have a consistent policy, which restricts the use of reserves.

"It has an economy that is growing more than 5 percent, an industry that is growing at 2 percent, a food industry falling 6 percent and to meet the needs of the population will have to increase imports more than 20 per percent, that is putting pressure on liquidity positions of the country, we need an economic strategy to reduce import requirements, which encourages the food industry and that the industry as a whole to grow at significant levels. "

Banchs Garcia added that the government must restore confidence to recover positive capital inflows to the country, so that "instead of having the massive movements of currencies, rather start coming currency".

International Reserves
The reserves are located in 24 000 443 million dollars, according to figures from the Central Bank of Venezuela updated to 25 September this year. The assets show a reduction of 18% from the beginning of January this year when it stood at 29,887,000.