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Last Updated: Wednesday, 24 November 2004, 18:10 GMT
Venezuela shuns IMF advice on oil money
By Iain Bruce
BBC News, Caracas

It's 6pm in the Caracas shanty town of Carapita. In the local schoolroom, Greydaris Motta and about forty of her neighbours are beginning class.

Greydaris Motta and her neighbours in class
Ms Motta has returned to school to safeguard her children's future

Ms Motta left school early. Her parents couldn't afford it and then she got pregnant.

Now Mission Ribas, as it's called here, is giving thousands of poor Venezuelans the chance to finish their secondary education.

Ms Motta wants to become a lawyer.

"I'm doing it for my children's future," she says. "If I study, maybe they'll follow my example."

Further up one of Carapita's winding alleys, a dozen other local residents are squeezed into someone's front room.

They've just finished Part One of Mission Robinson, which teaches basic literacy. Now they're beginning Part Two, which covers primary education.

The Venezuelan government says it's taught over a million adults to read and write in the last year - they say it may be the biggest literacy programme the world has ever seen.

Investing in the future

Many of the teaching methods used here - like almost all the 13,000 doctors and dentists working in the local surgeries that have also sprung up in Venezuela's poorest communities - come from Cuba.

Oil pipelines
Venezuela pumps oil money into literacy, health and social programmes

In exchange, Venezuela sends Cuba 53,000 barrels of oil a day at preferential prices.

Oil is the key to these 'Missions' which have brought immense popularity to Venezuela's government.

Last month, the new managing director of the International Monetary Fund (IMF), Rodrigo Rato, urged oil producing countries like Venezuela not to spend their extra income from high international prices - but to save it.

The government here has decided to do just the opposite. The world's fifth largest oil exporter - and a principal supplier to the US - is pouring money into literacy, health and other social programmes.

Heavy cost

With the price of Venezuelan crude averaging above $33 (17.8bn) a barrel this year - that's 65% more than was budgeted - the state oil company, PDVSA, is set to contribute an extra $6bn to public finances.

Oil company executive Moyer believes in investing in people

Even so, critics like business consultant Orlando Ochoa say that public spending is out of control. He says the government is trying to conceal the fact that oil production has not fully recovered from the opposition-led shutdown two years ago.

"With the actual level of oil exports, and the actual price, the government is still facing a fiscal deficit of $4bn," he says, insisting that PDVSA is failing to meet its own investment targets.

"So we're paying a cost, a heavy cost."

Social justice

The new, pro-government management at PDVSA is unapologetic. In addition to its higher fiscal contribution, the company is spending another $3bn directly on social projects administered by itself.

People who live in the shanty towns are given new hope

At the Fabricio Ojeda disused oil depot, in another poor neighbourhood of Caracas, PDVSA is building - with the local community - what it calls a "self-sufficient development centre".

There'll be a clinic and a school, a subsidised food store, an organic market garden and two small factories. After an initial period of support from PDVSA, the idea is that all should be run as independent, local co-operatives.

The state oil company's Head of Social Programmes, Hugo Moyer, told BBC News he believes the resources put into education, health, food and into creating stable, productive, well-paid jobs, should not be classified as expenditure.

It should be seen as an investment in people. "This country, like many others in Latin America, has a huge social debt to its population," he says.

It's a long way from the prescriptions for sustainable growth favoured by the IMF and most orthodox economists. But then the authorities in Venezuela are convinced they are charting a whole new approach to economic development and social justice.

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