Francisco Rodríguez proposes agreement to appoint joint BCV board of directors and procure international financing

Oil For Venezuela, a non-profit organization led by Venezuelan economist Francisco Rodríguez, published this Monday its most recent work: «TACKLING VENEZUELA’S HUMANITARIAN CRISIS: MOBILIZING RESOURCES THROUGH A POLITICAL AGREEMENT,» where it develops a proposal that would allow the country to access some of its funds abroad currently blocked by legal disputes and obtain multilateral financing – as is the case of the International Monetary Fund – to alleviate the effects of the crisis and the COVID-19 pandemic, based on a political agreement.

One of the bases of Oil For Venezuela’s work is the joint appointment, by the administrations of Juan Guaidó and Nicolás Maduro, of a single board of directors of the Central Bank of Venezuela to guarantee access to funds.

«A single board of directors of the Central Bank would guarantee the almost immediate availability of the Republic’s gold deposits in the Bank of England and would be an important first step in reaching an agreement with the International Monetary Fund. It is also important because it would restore the institution’s strictly technical character and give it independence in matters such as monetary policy, which is necessary to get the country out of a recession that has already lasted for more than five years» Rodríguez stressed.
The document also explores constitutional alternatives for the appointment of this joint Central Bank and complementary solutions that would allow the country to access the financing instruments of the International Monetary Fund (IMF).

«The proposal put forward in this document is part of a broader approach, which underlines the need for agreements between the parties to the Venezuelan political conflict that facilitate the country’s reintegration into the global economy to address its serious economic and humanitarian problems,» said Rodríguez.

A PROGRAM FOR EVERYONE

The Oil For Venezuela team focuses the design of its proposal on two sources of financing: the Special Drawing Rights (SDR) and the Rapid Financing Instrument (RFI) via IMF and Venezuela’s gold deposits in the Bank of England. «We believe that Venezuela could satisfy the IMF requirements for an IFR request in the context of a political agreement,» the document reads.

The program would cover four points: (i) a subsidy to each family so that those responsible for the household can stay at home during the quarantine periods; (ii) funds to cover health sector expenses related to the COVID-19 crisis, including a National Vaccination Plan; (iii) financing from the general budget to cover 25% of the losses due to the drop in oil revenues compared to last year; and (iv) transfers for Venezuelan migrants in vulnerable conditions. The total cost of the program would be $ 8.5 billion in two years and would be financed with the country’s SDR at the IMF (currently $ 5.5 billion, but subject to expansion), the $ 7.7 billion of possible financing through the RFI, and the gold deposited in the Bank of England ($ 2 billion).

«Our proposal is also flexible enough for a technical panel of experts to evaluate the best options in the case of vaccination and thus guarantee that Venezuelans will have access to scientifically reliable immunizations against COVID-19,» said Rodríguez.

AN AGREEMENT IS NECESSARY

To access the financing funds, the parties to the Venezuelan political conflict must sign an agreement that effectively makes it possible to use the resources to benefit the Venezuelan population.

«Our proposals are based on the recommendation of an agreement between the parties to the political conflict in the country, to unify institutions that play a fundamental role in the management of the Republic’s assets abroad. These institutions can be created from existing bodies as part of an agreement that helps resolve the dispute over the legitimacy of Venezuela’s political institutions or, alternatively, as part of partial agreements aimed at addressing the consequences of the economic and humanitarian crisis. of the country, even in the absence of a definitive resolution to its political crisis», reads the document.

The document also explains that the political agreement is necessary even for the deposit and use of funds, since there are accounts abroad in the hands of the Guaidó administration, but ultimately the government of Nicolás Maduro is needed for the distribution of the goods purchased through the program, for example, in the public health sector.

INTERNATIONAL SUPERVISION

An Administrative Board would govern the proposed program made up of recognized experts in the areas of humanitarian assistance and health, appointed by mutual agreement between the parties to the political conflict and with the participation of the international community. The board’s functions would be to procure all the goods and services to be acquired with the loan funds and other income from the program and the distribution of those goods and services in Venezuela.

The Administrative Board would also be subject to legislative oversight. Part of the agreement between the parties would give the National Assembly elected in 2015 and the National Assembly elected in 2020 independent powers to approve the submitted budgets, and their respective oversight committees would have the authority to investigate their activities.
In addition, an independent body would be in charge of supervising compliance with the program and whether it is being carried out according to the objectives of the political agreement that originated it.

«This agreement must have as its main objective to undertake concrete actions to attend to the humanitarian emergency in the country. We recommend that the negotiation of this agreement be separated from the negotiations on the crisis of political legitimacy that the country is experiencing. This type of negotiation can also become a pillar towards a gradual transformation of political incentives and thus open ways to find the necessary solutions to get out of the catastrophic stagnation that Venezuela is experiencing», concluded Francisco Rodríguez.