Merida, September 3, 2018 (venezuelanalysis.com) – The Venezuelan government’s Gold Savings Plan kicked off this Monday, with citizens invited to invest their savings in gold bars stored in the Central Bank in a bid to combat the hyperinflation sweeping the country.
The measure is the latest in a series of far-reaching economic reforms enacted by the Maduro government with the aim of stabilising the economy and promoting a culture of savings in lieu of oil-driven consumerism. It is the first time in which ordinary Venezuelans are able to directly own part of their country’s extensive gold reserves.
President Nicolas Maduro showed off the plan this Monday by purchasing 1.5 grams of gold on national TV. He emphasised that the plan is open to anyone, and urged workers, pensioners, and housewives to take advantage it.
“I have certificate number 1 of the Gold Savings Plan. I have just bought this savings certificate for a 1.5 gram ingot. I take the certificate and the ingot stays safely in the vaults of the Central Bank of Venezuela (BCV),” Maduro told viewers on national TV.
The gold is to be sold in 1.5 and 2.5 gram presentations, with citizens able to purchase fractions of each. The price of the ingots will vary according to market prices. On the first day of trading, a 1.5 gram ingot cost 3,780 BsS (US $62 at the official exchange rate), whilst a 2.5 gram ingot cost 6,300BsS (US $103). Investments can be transferred into liquid assets after three months.
“This is only possible if a revolution is in charge and the wealth of the country is at the service of the general well being, of the common good, and of social happiness,” explained Maduro upon unveiling the program.
One of the objectives of the plan is to promote a culture of savings in the highly-consumerist Venezuelan society.
The Plan for Savings in Gold started! 10th line of economic action to strengthen the culture of family savings. This is possible only in Revolution pic.twitter.com/hcUUyV5ytG
— Nicolás Maduro (@maduro_en) September 3, 2018
“One could buy various different savings certificates and gift them to your children, grandchildren, dad or mum, maybe it will be a fashionable Christmas present… It is a savings plan for the entire family,” Maduro urged.
Saving in local currency has been unpopular for many years due to inflation spiraling well above bank interest rates. Many prefer to invest in unneeded surplus goods, such as vehicles, properties, or even foreign currency to protect their savings from inflationary devaluation. This in turn has created excess demand, shortages of goods, and further inflationary pressure on specific items.
The new plan looks to redress this situation and “protect” workers’ savings, whilst moving away from an increasingly dollarized economy. It also looks to ease some of the monetary pressure on the economy, with savings certificates being accepted as collateral for bank loans or other purchases.
Venezuelans are to receive a significant minimum wage rise this month. At 1,800BsS a month, a worker on minimum wage will be able to purchase half a 1.5 gram gold ingot.
“I don’t want people to spend it all,” stated Maduro in reference to the new higher wages. “What I want is a secure, stable savings plan.”
Apart from the wage hike, the government has brought in a revamped currency, tax reforms, and a major modification in state subsidies.
The new “Sovereign Bolivar” currency is to be pegged to the new Petro cryptocurrency, which in turn is pegged to the price of a barrel of oil. As such, both wages ─ and now savings ─ are reportedly to be pegged to relatively stable commodity prices based on the country’s natural resources instead of parallel market US dollar prices in an effort to shore up confidence in the national currency.
Critics of the plan have pointed to a further deepening of land rent culture, with the economy depending on the extraction of natural wealth below Venezuela’s surface rather than national production geared towards the internal market.
Other critics have claimed that the measure will not rein in inflation, and is merely a “distraction,” as economist Luis Laguado claims, yet many argue that it is too soon to evaluate the measures.