Venezuela Announces Public Investment Plan

Mérida, February 10, 2009 (venezuelanalysis.com)– In the first quarter of this year the Venezuelan government will spend US$2.5 billion on an economic plan aimed at guaranteeing economic growth and social well being, Haiman El Troudi, the minister for planning and development, explained.

The plan itself spans 2009-13, and is also directed at avoiding the effects of the world economic crisis through three main strategies; 209 public investment projects, injecting resources into the current budget, and putting further impetus into financing through public banks.

El Troudi said that of the 209 projects, 88 are petroleum-based projects. The funding for these projects will come from the National Development Fund (Fonden) and the China Fund. He explained that these expenses go beyond what is available to each ministry as part of the annual national budget.

Included in these projects are factory construction, construction of highways and roads, irrigation systems, food processing plants, another petrocasa (government subsidized houses made from petroleum processing leftovers) factory, and medicine that would be distributed for free.

El Troudi also stressed that the resources for the economic plan “are guaranteed and in the accounts of the Republic” and don’t depend on the fluctuation of the price of oil.

President Hugo Chavez elaborated this point while speaking in an interview on private TV channel Venevision on Sunday and explaining how Venezuela was protected from the financial crisis, “We have saved resources that guarantee us all the necessary imports for the next two years.”

He cited the international reserves (US$43 billion), Fonden (US$53 billion), and the China-Venezuela Structural Fund (US$12 billion).

The money in FONDEN comes from international reserves and petrol income surpluses, and according to Chavez it has received US$ 57.75 billion since 2005.

Regarding the second strategy of the plan, bank financing and more credit delivery, El Troudi explained that the point of this was to further diversify national production. And Chavez, speaking on Sunday, said that by stimulating national production, employment would also be stimulated and continual economic growth would be guaranteed.

Last Friday Chavez delivered 15,500 credits to small and medium producers, cooperatives and social mission beneficiaries. They are part of the 106,000 credits planned for this year, worth BsF9.9billion (US$ 4.6 billion), a figure 43% higher than the total credits handed out last year.

The credits are distributed through banks and funds, including the Agricultural Bank of Venezuela (BAV), the Bank of Economic and Social Development (Bandes), the Industrial Bank of Venezual (BIV), the Socialist Agricultural Development Fund (Fondas) and the National Milk Production Fund (Fonaprole).

“It’s something without precedent, because at the beginning of the revolution credits handed out by the public financial system were almost zero, 122 million in 1998…[and now] thanks to the policy of democratizing capital and redistribution of  income [we are going far beyond that],” said El Troudi.

El Troudi said that the government ended last year in surplus, which means that resources for these programs are guaranteed beyond the third quarter of this year.

Questioned by Venevision about the financial crisis, Chavez said that his government had been implementing measures to protect itself from the financial crisis ten years ago, including redirecting the destination of its international reserves, implementing exchange controls and initiating the independence of the economy from institutions like the International Monetary Fund and the World Bank.

“What measures will we take so that the crisis doesn’t affect us, or so that it affects us minimally? It’s just that we are already taking them. If we hadn’t stopped trusting our international reserves to the big banks in the United States, a good part of those reserves would be lost.”

While Chavez suggested that the full impact of the crisis would depend on how long it lasts, he said, “The important thing is that now, in the first year that it has become evident, it hasn’t affected us even a tiny bit.”

“If we hadn’t changed the constitution, if we hadn’t changed the Central Bank law, the law of finances and administration, these resources [such as FONDEN] today would be in the hands of the Venezuelan exploiting financial oligarchy,” he said.

Meanwhile, in other economic news, a shipment of 500 cows has left Nicaragua for Venezuela as part of the fair trade agreement promoted by the Bolivarian Alternative for America (ALBA).

According to Douglas Aleman, vice president of the National Union of Farmers and Livestock workers, said it is the fifth shipment, making a total of 2,700 cows to help improve Venezuelan herds.

Venezuela is buying beans, meat, and other food from Nicaragua in exchange for selling oil and machinery at preferential prices.