Venezuelan president approves Central Bank reserve fund to pay for public projects

Venezuelan President Hugo Chavez has approved the creation of a new national development fund that will hold part of the Central Bank's foreign reserves to be used for public projects.

The Finance Ministry will create and control the National Development Fund, which will manage an initial US$6 billion (Ђ4.92 billion) of the Central Bank's foreign reserve holdings, according to an entry in Venezuela's official register released Wednesday.

The fund is charged with "financing investment projects, education, health, improving the profile of public debt and tending to special events," according to the official register.

The fund will be run by a five-member board made up of Finance Minister Nelson Merentes, Oil Minister Rafael Ramirez, Planning Minister Jorge Giordani, and two more directors to be named by Chavez.

Central Bank officials could not be reached for comment on the matter.

Earlier this year, the mostly pro-Chavez National Assembly changed the central bank law to allow the transfer of foreign reserves to a special investment fund.

Every year the central bank must now calculate an "optimum" reserve level and transfer the resulting excess to the newly created fund.

Chavez has said the money managed by the new fund will be used to purchase machinery and other services overseas, as well as pay off debt, AP reported.