Venezuelan Government Increases Public Works Investments as Economy Recovers from Recession
Caracas, March 13th 2011 (Venezuelanalysis.com) – On Saturday and Sunday, the Venezuelan government announced new public investments in housing and infrastructure aimed at aiding flood victims and stimulating the economy.
On Saturday, President Hugo Chávez slowly drove a jeep in a caravan through low-income communities in the outskirts of Caracas, greeting excited local residents and the media. He announced the approval of 4.2 billion bolivars (US$977 million) for housing construction in Caracas, the central plains state of Barinas, and the coastal Aragua state.
The houses cost 200,000 bolivars on average – a modest price by Venezuelan standards – and include sturdy walls, quality roofing, good plumbing, and a drinking water supply – a veritable improvement from the shacks and improvised homes on precarious hillsides in which many Venezuelans are crowded, according to Chavez.
On his presidential talk show on Sunday, Chavez announced a 2.6 billion bolivar (US$605 million) investment in drinking water services for historically marginalized low-income communities in Miranda state.
The president also announced a 450 million bolivar (US$105 million) public investment to rebuild the region south of Lake Maracaibo in western Venezuela. The fertile agricultural zone was devastated last December when rains, flooding, and landslides ruined crops, washed out roads, and destroyed homes.
In addition, workers on the 24 farms that were nationalized following the storms received a 124% wage increase, and the government forgave the debt on state loans to 276 local farmers and 36 communal councils, which are neighborhood elected governing bodies.
Much of the money for the investments will come from special funds the president created by law-decree last year using controversial fast-track legislating power granted to him by the socialist-controlled National Assembly. China, Russia, and Belarus have also provided generous credit lines to the government.
Nationwide, more than 130,000 Venezuelans were left homeless by last year’s storms. The people have been living in state-run camps where they receive food and medical attention.
The Venezuelan economy is slowly emerging from a six-quarter recession caused by an extended drought that nearly collapsed the national electric system in 2009, and a drop in the price of oil, Venezuela’s chief export, due to the world economic crisis.
With a presidential election around the corner in 2012, the public works projects are expected to be expanded. Chavez has pledged to build 2 million homes over the next six years, starting with a pledged investment of 30 billion bolivars (US$6.9 billion) for the construction of 150,000 homes in 2011.
In recent years, housing construction was hampered by a shortage of cement both before and after the nationalization of the cement industry in 2008. The BCV reported that in 2010, the construction industry shrank because of a low supply of “basic inputs.” The government rushed an importation of nearly 7,000 metric tons of cement for emergency housing construction from Cuba and Colombia following last year’s storms.
The government’s plan to develop oil fields along the Orinoco River Belt in joint deals with multi-national corporations is projected to bring 667 billion bolivars (US$155 billion) of investments into the region in the coming years.
State-run food production and distribution networks, which provide thousands of tons of food daily to people nation-wide, will also be expanded, according to Chavez.
The National Annual Operational Plan for this year allocates 40.7 billion bolivars (US$9.5 billion) to a series of programs including education and health care, domestic gas and oil distribution infrastructure, alternative energy research, the construction of a major new hydroelectric facility, women’s services, and stimulus to small and medium-sized businesses.
According to the Planning and Finance Ministry, public investments have nearly doubled as a percentage of the GDP under the 12-year Chavez government. In 2009 public investment reached 87.3 billion bolivars (US$20.3 billion), which was 12.5% of the GDP, an increase from 7% of the GDP in 1999.
Published on Mar 14th 2011 at 10.49am