Venezuela Central Bank Transfers $3 Billion to State-Run Fund

Venezuela´s central bank transferred $3 billion of its international reserves to a fund controlled by President Hugo Chavez for government spending projects.

The government has earmarked $984 million of the fund for transportation infrastructure projects, such as expanding the subway system in Caracas and building a train to connect Caracas to its southern suburbs, Chavez said.

Chavez, 51, increased spending 38 percent in the first half of the year, fueling economic growth of 9.3 percent. Reserves rose to $31.7 billion earlier this week from $11 billion in January 2003 as record oil prices drove up exports for Venezuela, the world´s fifth-largest crude exporter.

The fund, approved by congress in July, will have $6 billion of reserves by the end of the year, Chavez said. The government will use the money to buy imports for projects and social programs, including medical and farm equipment, Chavez said.

Venezuela may also use the money to make foreign debt payments and buy back debt, Chavez said.

Finance Minister Nelson Merentes said earlier this month Venezuela plans to lower total debt to 30 percent of gross domestic product from 40 percent now. Venezuela had $27.7 billion of international debt and $15.3 billion of domestic debt as of March 31, according to the Finance Ministry´s Web site.

Venezuela also plans to buy $150 million of bonds from Argentina, Finance Minister Nelson Merentes told reporters. Argentina hasn´t yet decided on the details of the sale, Merentes said.

Chavez said last week that Venezuela would buy as much as $500 million worth of bonds from Argentina, adding to $500 million of the securities it bought in the first half of the year.