| Venezuela using forex reserves to fund government programs
http://www.forbes.com/business/newswire/2004/01/07/rtr1201667.html
Chavez threatens Venezuela central bank takeover
Reuters, 01.07.04, 2:40 PM ET
By Pascal Fletcher
CARACAS, Venezuela, Jan 7 (Reuters) - Venezuelan President Hugo Chavez threatened on Wednesday to take over the country's autonomous central bank if it did not agree to his demand to hand over $1 billion in reserves to finance farming projects.
The left-wing populist president has waged a noisy two-month public campaign to pressure the Central Bank of Venezuela (BCV) to free the funds for his government, which has clashed with the bank in the past over economic policies.
Central bank directors have so far resisted the president's repeated public threats, arguing that the country's laws do not allow them to use international reserves to finance the government's current spending.
"Well, we'll see. If the Central Bank of Venezuela has to be taken over, then it will be," Chavez said at a rally in the western oil state of Maracaibo.
As he spoke, around 100 of his supporters demonstrated outside central bank headquarters in Caracas to back his demand for the $1 billion handout to finance food production.
Chavez said it was "illogical and absurd" that the bank should be holding international reserves of more than $21 billion, while the government was spending millions of dollars to import basic food staples like beans, milk and chicken.
He wants to tap the foreign reserves to set up farm cooperatives as part of his self-styled "revolution", and to finance increased food crops in the world's No. 5 oil exporter, which imports around 60 percent of its total consumer needs.
"SABOTAGE"
Chavez accused his political opponents, who are seeking a referendum this year on whether he should stay in office, of backing the central bank in its refusal to free the funds.
Their aim was to "block the country's development, sabotage the government", he said. He has also threatened to appeal to the Supreme Court if the bank does not release the reserves.
The pro-Chavez demonstrators in Caracas set off firecrackers and waved banners calling for government intervention in the central bank. They also draped a large banner of Argentine-Cuban revolutionary legend Ernesto "Che" Guevara over the steps of the bank headquarters.
Chavez's determined campaign has raised fears that he may try to seize complete control of the central bank. It currently enjoys autonomous status but is bound by the constitution to coordinate economic and fiscal policy with the government.
"This money belongs to the people ... the central bank hasn't been helping the country," said Lucy Barquilla, a pro-government farm cooperative leader who took part in the Caracas protest.
Political foes of the president, who has ruled for five years after winning a 1998 election, have accused him of accumulating dictatorial powers by seizing political control of key state bodies and economic institutions.
They point to his firings of more than 18,000 employees of the state oil firm PDVSA after an anti-government strike in December 2002 and January last year. These firings allowed Chavez's government to completely take over and run the strategic company, which had previously enjoyed a large degree of corporate autonomy.
Copyright 2004, Reuters News Service  |