Venezuela to use $12B in Central Bank reserves

CARACAS, Venezuela - President Hugo Chavez said Friday that the Central Bank will transfer $12 billion, or 28 percent of its international reserves, to help the government maintain broad social spending as oil prices fall.

He said the institution has already begun transferring reserves deemed to be "excess," and will continue through February.

"We have started the year without the need to look for money from the (International) Monetary Fund or anybody else," Chavez said.

As oil prices plummet, threatening Venezuela's main source of revenue, Chavez has said he will draw on its $42 billion in international reserves and other funds. Venezuela relies on oil for 94 percent of exports and nearly half the government's budget.

"We have financing," said Chavez, who has repeatedly vowed to maintain social spending in spite of the world financial crisis. "First of all, our own."

The socialist leader said his government can tap some $3 billion "available for investment" from a joint development fund known as Fonden.

Another $3 billion is available in a fund with China, Chavez said, adding that it would receive an additional $6 billion in the coming weeks.

Four years ago, Chavez enacted a reform obliging the Central Bank to fix an optimal level of international reserves and transfer the rest to the government each year. Some Bank directors and economists rejected the move, saying it hurt the institution's autonomy.

The reform also enabled Chavez to dispose of oil earnings without Central Bank control, by requiring state oil company Petroleos de Venezuela SA to give the Bank only the money corresponding to its fiscal contribution. Previously, PDVSA was required to hand over all its earnings.

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