How much money is there in Venezuela’s development fund FONDEN?

March 4, 2009

The question as to how much money is available in Fonden for the Government to use has become the 64,000 dollar question and it is something one can only answer once or twice a year and even then, it is almost impossible to answer it with precision.

The last time we saw a financial statement for Fonden was June 30th. 2008, in the webiste for the fund. Since then, this statement has disappeared and reappeared, but no new information has been available. Then in November we heard the fund had like US$ 8 billion and in the last two days we heard the Minister of Energy and Mines say twice, with a straight face, that the fund had US$ 57 billion. Showing how little Ramirez understands numbers he said Venezuela was “privileged” to have saved US$ 57 billion in the fund.

It turns out, no such luck, Venezuela has put into Fonden a total of US$ 57.4 billion over the last four years, but most of it has been spent, as described in the “Memoria y Cuenta” presented to the Venezuelan National Assembly on February 27th. 2009.

This document does not reveal much, it is not even known if the numbers are audited, but this is how I interpret what it says:

As of December 30th. 2008, Fonden had US$ 6.07 billion in investments. This is what is available to give away. However, this is 73.24% in short term investments or US$ 4.44 billion. Additionally it had 26.76% or US$ 1.62 billion in “medium and long term bonds and structured notes”, read structured notes and Argentinean bonds purchased at 65% of their face value, today well under it.

Nowhere in the description does it say whether these are market values or invested values or face values. I suspect that these are either values at which they were purchased, which implies, the market values are much smaller. I will assume 50% for both. This then says that Fonden had as of Dec. 31st. 2008, around US$ 5.25 billion, but it would be a bad move at this point to sell either the bonds or the structured notes, so this is there, but can not be used.

If one then adds to this the US$ 12 billion given to Fonden in January, Fonden has between 16.4 and 17.25 billion dollars of which only the lower number is available for expenditures.

And forget about Ramirez’ “savings” of US$ 57 billion…

As simple as that.

3 Responses to “How much money is there in Venezuela’s development fund FONDEN?”

  1. EG Says:

    MO,

    OK, this likely answers a question I asked in a previous post.

    Now, $12B were transferred to FONDEN in late January. Is there any way of knowing if that is still there?. Even if indirectly? . I can’t help but wonder if PDVSA finally getting up to speed with its overdue bills is, in any way, linked to this. Maybe it’s just me being overly paranoid.

    EG

  2. Alek Boyd Says:

    Miguel, tienes una fecha errada en el post: “The last time we saw a financial statement for Fonden was June 30th. 2009″ should be 2008

    Thanks for this BTW.

  3. moctavio Says:

    EG: We are lucky to know within two months what was there in December, we have no clue about what is there now. Alek: Thanks, I fixed it, I guess a year there a year here, fifty billion there , fifty billion here.


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