FEM – Macroeconomic Stabilization Fund

Venezuela US$ 0.8 Billion Origin: Oil

Profile Directories

Sovereign Wealth Funds

Public Funds

Established: 1998
Transparency Rating: 1
View Sovereign Fund Transaction Data

Firm Investment Style: N/A
Entity Structure: Fund

Fund Details

Strategy & 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.

Main Office
Présidence de la République
Avenue Léopold Sédar Senghor
Senegal
Tel: 33 880 80 80

Governance[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Summary
In 1998, Venezuela’s Macroeconomic Stabilization Fund also known as FEM was created as a result of advice from the International Monetary Fund. Jorge Giordani was the planning minister at the time and viewed it as a fund, that of squirrels, who save up their bounty for future use when they can’t find food.”

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.

By December 2001, the fund had US$ 7.1 billion in assets. In 2003, the government tapped into the fund to cover the fiscal budget, more than US$ 6 billion was withdrawn.

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.