Venezuela's Chavez Says Bank Funds to Pay for Development Projects
http://ap.tbo.com/ap/breaking/MGBZ8A85EBE.html
CARACAS, Venezuela (AP) - President Hugo Chavez said Wednesday his government
would spend funds from the central bank, which have been made available under
new legislation, on development projects such as modernizing agriculture.
"This is going to permit the Central Bank of Venezuela to contribute to the
development plans of the executive branch," said Chavez, speaking to government
supporters at Miraflores presidential Palace.
Lawmakers allied with Chavez approved a central bank reform law late Tuesday
giving the leftist leader access to more than US$6 billion (euro5 billion) in
international reserves held by the bank.
Under the legislation, an "appropriate level" of reserves would be determined
each year, with any excess transferred to a government development fund for
paying off foreign debt and federal spending needs.
Approval of the bill drew sharp criticism from economists and opposition lawmakers,
who said the legislation would gradually force a devaluation of the local bolivar
currency and lead to higher inflation.
Financial resources from the central bank will be deposited in the National
Development Fund, a newly-created fund controlled by the government.
Omar Bello, a former central bank vice president, called the fund "another
checkbook for the government to spend ... and that means more possibilities
for maintaining an expanding (fiscal) policy."
The central bank now holds more than US$29 billion (euro24.24 billion) in reserves,
but Chavez has said that keeping US$20 billion (euro16.72 billion) cap on the bank's
international reserves is sufficient.
Some of the central bank resources will pay for loans to small farmers and
"the latest agricultural machinery to push forward with the development of
the farmlands," said Chavez.
Chavez said financial resources coming from the central bank would be spent
outside of Venezuela to prevent a significant increase in inflation during
coming months.
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