UPDATE 2-Bolivia's Morales seeks to tap reserves to boost industry
By Carlos Quiroga
Morales, a leftist who has tightened state control over the economy by nationalizing natural gas fields, mines and utility companies, says large-scale infrastructure and industrial projects are key to fighting entrenched poverty in the Andean country.
The former coca farmer said he had sent a bill to Congress that would set aside an initial $1.2 billion in currency reserves to establish a state-run industry development fund.
"This is a fund for productive industrialization. This fund will only be used to add value to what we produce," Morales told reporters as he outlined the proposal, which will likely win approval in the ruling party-controlled Congress.
"It's a small part of the foreign reserves, which will go toward industrializing our natural resources," he added.
Morales, who has long considered the possibility of tapping the reserves to help finance investments, said the Fund for the Productive Industrial Revolution, or FINPRO, would be used for state company projects and mixed private-public schemes.
Bolivia is South America's leading natural gas exporter - supplying neighbors Argentina and Brazil - and is rich in metals including silver, zinc and tin.
RECORD HIGH RESERVES
When Morales took office in 2006, the reserves stood at $1.7 billion. He told Reuters in a 2010 interview that he would only consider tapping the reserves if they exceeded $10 billion.
Morales' decision to dip into the savings could raise eyebrows on Wall Street as the country considers returning to global credit markets for the first time in more than 70 years.
Meanwhile, Bolivia's long-announced intention to resume global bond sales has been delayed despite ratings upgrades by Fitch Ratings, Moody's Investors Service and Standard & Poor's, which have praised Morales' "prudent" macroeconomic policies.
Morales, a fierce critic of U.S. foreign policy and an ally of Venezuela's Hugo Chavez, is not the only Latin American leader seeking to take advantage of years of healthy foreign currency inflows.
In Argentina, President Cristina Fernandez has earmarked billions of dollars of central bank reserves to make debt payments for a third consecutive year, a policy that has allowed her to maintain generous levels of state spending.
While Morales' drive to boost the state's role in the economy pleases his support base, it has rattled foreign investors and energy companies operating in the country.
Despite high-profile government announcements of industrial initiatives in the energy and mining sectors, few projects have come on line. Some analysts say weak adminsitration in newly strengthened state companies is to blame.
(Writing by Helen Popper, Editing by Dan Grebler, Gary Crosse)