FEM – Macroeconomic Stabilization Fund

Venezuela US$ 0.8 Billion
Established: 1998
Transparency Rating: 1
Origin: Oil
Firm Investment Style: Mixed
Entity Structure: Fund
Summary
In 1998, Venezuela’s Macroeconomic Stabilization Fund also known as FEM was created as a result of advice from the International Monetary Fund.
Oil revenues above the oil reference price are transferred to the sovereign wealth fund.

If oil prices drop below the reference price, the fund transfers revenues to the treasury to substitute the revenues it would otherwise have received if oil prices had been stable.

Background
FEM, which translates to the Fund for Investment of Macroeconomic Stabilization, is a fund created by the authority of the Presidency of the Republic. The regulation of the fund by the Board of the Central Bank of Venezuela (BCV) began in December of 1999. The fund serves to hedge the fluctuation of income generated by crude oil.

Strategies & Objectives:
FEM resources are generated mainly from Petroleos de Venezuela SA oil crude profits. Contributions made the National Executive may also be considered a funding source for the FEM.

Governance
The Board of the Central Bank of Venezuela (BCV) governs FEM and ensures compliance, approves annual operating budgets, approves annual fund reports, issues internal regulations, approves expenditures, establishes policies and ensures that the fund functions as they desire.

Approved annual fund reports are submitted to congress no later than fifteen days.

Executive management of the central bank is appointed by the Venezuelan president.

The legislature has limited involvement with any decision-making regarding the fund, nor does it have an oversight role.

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