Mérida, May 17, 2007 (venezuelanalysis.com)— Venezuelan Finance Minister Rodrigo Cabezas reported to the National Assembly yesterday that the National Development Fund (Fonden) has received a total of US$ 27.3 billion from the Central Bank and PDVSA, of which US$ 20.2 billion have been invested in public projects. Cabezas emphasized that the fund has become the fundamental means of increasing investment in the country.
The minister presented the first quarter report of Fonden yesterday, providing details of its investment in 130 different development projects in the country. The report showed that US$ 20.15 billion from the country’s hard currency reserves have been invested in various areas such as housing, defense, energy, and infrastructure.
Cabezas emphasized the importance of the fund in improving public investment in Venezuela during the current sustained economic growth. "Fonden was born as a vehicle to change the distribution of the oil income in Venezuela," he said.
Of the US$20.15 billion invested 17.4 percent were directed to infrastructure, 17 percent to energy and petroleum projects, and 11 percent went to defense. For housing projects the fund invested 9 percent of the resources and 4 percent for health.
And among the specific projects financed by Fonden are the Caracas subway for a total of $699 million, the Los Teques subway for $254 million, $259 million for the Guarenas and Guatire subway, $194 million for the subway in Valencia, and $120 million for Maracaibo’s subway.
The Fonden fund was created in 2005 with the main objective of improving economic growth and increasing social spending. The fund began with an initial balance of $6 billion from the Central Bank’s “excess reserves,” but was criticized by opposition groups who questioned it as a vehicle for investment, saying it would only cause inflation. Currently, currency reserves exceeding $30 billion are considered to be “excess” and may be transferred to Fonden.
Cabezas assured the transparency of the fund today, pointing out that the activities of Fonden have a series of regulations that guarantee their supervision. For example, the minister explained that the fund is required to continually publish reports about its financial status, its general balance, and results. He also pointed out that in 2006 they published four different reports throughout the year.
"Anyone who wants to follow up on this, and do an investigation of Fonden, has the publication of these reports as a primary resource," he said.
According to Cabezas, an inspection process will begin next Monday, May 21st to audit and inspect all the projects that are being financed. The process will be carried out by the internal auditing management.
"The objective is to achieve the highest efficiency and effectiveness in the use of the resources, to get information about the physical and financial execution of each one of the projects in order to make Fonden transparent," he said.
He pointed out that the Fonden development fund will be very important over the next few years to stimulate economic growth as it is used to change the distribution of Venezuela’s wealth, especially the oil-based income.