Macroeconomic Stabilization Fund - FEM

Definition of 'Macroeconomic Stabilization Fund - FEM'

A reserve fund established by the country of Venezuela. Also known as the "FEM," it was created at the behest of the IMF to stabilize the national cash flow generated from oil production. It receives all monies generated from oil production above a certain price per barrel and pays out the difference if the price falls below this level.

Investopedia explains 'Macroeconomic Stabilization Fund - FEM'

The price per barrel above which revenue is diverted into the fund is based on the average price of oil over the past five years. Oil price fluctuations are hedged with future contracts on an as needed basis.

The fund is governed by the Board of the Central Bank of Venezuela.