Lies, damn lies, and Fonden

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Quico says: One aspect of this whole Economic Adjustment story that isn’t getting enough attention is “the development fund that didn’t bark”: Fonden. Sold to us for years as Venezuela’s “rainy day fund” which would shield the country in case of a fall in oil prices, Chávez picked a very odd time to go all silent about it.

As recently as yesterday, Finance Minister Alí Rodríguez was still adamant that the government has $57 billion ferretted away in Fonden. Not, mind you, that he’s willing to actually show us Fonden’s balance sheet. Apparently, asking for details about where exactly the public’s money – our money – is kept, in what form, is an outrageous provocation. But I digress.

Of course, the degree to which the money in Fonden could really be considered “savings” was always open to question. Still, considering the way it’s been described to us for all these years, I was amazed that Chávez could spend hours and hours talking about the financial crisis on Saturday and never once mentioned Fonden!

In effect, the official position is something like,

Rest assured, we have $57 billion stashed away in Fonden: it’s insurance in case oil prices fall. Of course, oil prices have fallen by some 66% since their peak last year. On second thought, though, we’ve decided that instead of using the money we’d set aside for exactly this contingency, we’d rather borrow astronomical figures from the banks (even though that fuels inflation and risks a financial crisis) and raise taxes while we cut public spending (even though we’re headed into a recession, and that’ll make unemployment worse) because…well, y’know, just because.

Makes perfect sense…and it shows with crystal clarity why only a patria-sellin’, CIA-conspirin’ imperialist ne’erdowell would think to demand transparency over Fonden’s finances. The money’s not there!

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