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10/8/08

Venezuela Taps its International Currency Reserves

Hugo prepares his speech for next Sunday's Alo Presidente

Hot damn, I was talking about this only yesterday with a smart person I know in Caracas. Smart person said that Chávez would tap several billion of Currency Reserves, and smart person even dug up an old story to show there was a U$29Bn roof on reserves not so long ago.

So sure enough, today the news hits (see the Bloomie newswire paste under the line). With $38Bn or $39Bn in the fund right now (depending on which way you slice), this brings things down to $31Bn tucked away and $7Bn extra play money for Chávez's social programs. Even though it'll give fuel to the Chávez haters (who would have criticized him later if he hadn't skimmed reserves) the move makes a lot of sense at this precise moment, clearing the way for the 2009 budget to be that much less onerous.

So Kudos to my smart friend, whoever s/he may be. You nailed that one. Applause.

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Oct. 8 (Bloomberg) -- The Central Bank of Venezuela will probably transfer $7 billion in "excess'' reserves to the government's off-budget National Development Fund this year, President Hugo Chavez said.

Since the fund was started in 2005 to finance government projects, the central bank has transferred between $10 billion and $12 billion in reserves into it, Chavez said. Venezuela has also collected "almost $4 billion'' from a new windfall profits tax on the oil industry this year, he said.

For Related News:
Stories about Venezuela: NI VENZ
Top Latin American News on Bloomberg: TOP LAT

--Editor: Brendan Walsh