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Venezuela plans to invest $100 billion in projects
By Alex Kennedy
Bloomberg
CARACAS
Petroleumworld.com 10 10 06
Venezuela plans to invest $100 billion over the next six years in 120 infrastructure projects such as roads, ports and bridges as record oil income swells government coffers, Planning Minister Jorge Giordani said.The country's gross domestic product will probably grow 5 percent to 6 percent a year for the next six years, Giordani said. Venezuela's $132 billion economy is South America's third largest.
Prices for Venezuelan oil, which have averaged $58.09 a barrel this year, would have to rise for the government to have enough money to carry out their investment goal, said Alejandro Puente, an analyst with Banco Provincial in Caracas.
``This sounds more like a wish than an actual plan,'' Puente said in a telephone interview. ``The government would also have to keep all other government spending in check, something that's hard to imagine.''
President Hugo Chavez will use part of a record $30.5 billion of oil income during the first half to invest about $5 billion this year on infrastructure projects, Puente said. Venezuela must boost private investment to achieve Giordani's goal of 5 percent economic growth for the next few years, Puente said.
``Current levels of private investment won't sustain growth at the level the government is talking about,'' Puente said.
Venezuelan private investment is about 10 percent of GDP, which compares with an average of 20 percent for Latin America, Puente said.
Chavez has accumulated $17 billion in a special spending fund, known as Fonden, during the last year for infrastructure projects and debt payments. Transfers of central bank international reserves account for most of the fund, which is controlled by Chavez and is outside the central government budget.
``Our economy could double in the next six years,'' Giordani said during a speech in Caracas on the state television station. ``Our medium-term strategy is to develop the internal market through public investment.''
Chavez boosted government spending 67 percent in the first seven months of the year, helping to spur 9.6 percent economic growth in the first half. The economy grew 9.3 percent last year and 18 percent in 2004.
To contact the reporter on this story: Alex Kennedy in Caracas at Akennedy1@bloomberg.net .
Bloomberg 09 10 06
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