From the still-vex'd Bermoothes.
In one of the most bizarre economic discussions to take place in Venezuela, news has been dominated during the last week by the request by President Hugo Chavez that the Venezuelan Central Bank "give him" US$ 1 billion (He actually asked for "un millardito", a little billion translated literally) of the country's international reserves to use in agricultural projects. The discussion, which began last November but had died away, was revived in earnest by the Pesident in his Sunday nationwide TV program. This time around, the President's supporters have joined the fray with demonstrations in front of the Central Bank and an exhortation by the National Assembly by a vote of 57 to 37 for the Central Bank to comply with the President's request. On Wednesday, Chavez even threatened to intervene the Central Bank if his wishes were not granted. Chavez' statement was made as the country was closing the book on a US$ 1 billion 30 year bond which was oversubscribed by a factor of four. This forced the Ministry of Finance to issue a press release claiming that the President's statements were taken out of context. However, Chavez' speech was carried live by all TV stations, leaving no doubt as to the President's words.
At the beginning, most analysts had thought that Chavez was just making use of an issue which most citizens do not understand to blame the Central Bank for the failure of his administration to get the economy moving. In fact, the Venezuelan Central Bank is one of the few institutions which retains some idependence from the Government. By now, Chavez and his Government have mounted an all out campaign on the Central Bank which does appear to be aimed at intervening it for not complying to the President's demands. On Friday the President of the National Assembly visited Chavez and promised to change the Central Bank law to accomodate the President's request. Today, agricultural workers protested in front of the Central Bank Headquarters.
The Central Bank issued a press release trying to explain the inconvenience of complying with the President's request, but the issue is not easy to explain to the general public. Today, Central Bank Director Armando Leon tried to explain it simply when he said: “The difference between Venezuela and a game of Monopoly is that currencies have backing, thus using the reserves would imply that the bills in circulation would be similar to the bills in Monopoly”. Unfortunately, if President Chavez has his way, our currency will only be good to play Monopoly.
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