MAYELA ARMAS H.
MARIANNA PÁRRAGA
EL UNIVERSAL

This year both the Venezuelan Executive Branch and the state-run oil conglomerate Petróleos de Venezuela (Pdvsa) have to face a number of debt maturities.

Total payments due in this fiscal year amount to USD 8.03 billion, out of which USD 3.9 billion are in domestic debt bonds (Vebonos).

Foreign debt repayments add up to USD 2.12 billion. Based on the figures disclosed by the Finance Ministry, these obligations mostly comprise Eurobonds, with the payments due at USD 1.3 billion.

Concerning the Venezuelan oil giant Pdvsa's obligations, the conglomerate is due to make debt repayments at USD 2.87 billion.

In the first half
The Finance Ministry has been authorized to issue debt bonds, as the Venezuelan Congress already passed the financial terms governing the debt instruments to be placed in the present fiscal year, both for debt servicing and debt refinancing. Based on official sources, most debt-related transactions should take place in the first half, as debt maturities are accumulating.

José Guerra, a former research manager at the Central Bank of Venezuela (BCV), claims that the government has the capacity to afford the payments and has always met its obligations. However, given the amount of money it has to earmark to repay debt, the government may be forced to review public expenditures, particularly fund transfers to specific projects.

Meanwhile, the CEO of Pdvsa and Minister of Energy and Petroleum Rafael Ramírez argues that in 2008 budget -yet to be disclosed- the corporation included provisions to afford due debt payments. Therefore, the firm is unlikely to resort to refinancing.

Ramírez stressed that during this fiscal year, the conglomerate would not contract debt at the same pace as in previous years. He explained that Pdvsa has plans to invest USD 15.6 billion, with 70 percent from Pdvsa's funds and the remaining 30 percent (some USD 4.7 billion) would be raised through financing.

While Ramírez would not refer to the circulating debt of Petrozuata and Sincor, Pdvsa is likely to fully repay their debts, as virtually all of the bonds issued by Cerro Negro and Ameriven were took off late in 2007.

In whole
The Venezuelan total public debt -including the Executive Branch, Pdvsa, and BCV- amounted to USD 62.2 billion at the end of 2007. In 1998, it was USD 35.4 billion, according to Guerra.

Foreign debt stands at USD 25.8 billion, while domestic debt is USD 14.5 billion. BCV's obligations add up to USD 5.8 billion, mostly comprising debt bonds issued amidst efforts to dry up spiraling liquidity in 2007. However, Guerra explains that such BCV debt has decreased, as private banks have purchased US dollar-denominated bonds.

Pdvsa's accumulated debt is USD 16 billion, based on the corporation's last published financial statement. Most of these obligations were contracted in 2007, when both Pdvsa and its US-based refining branch Citgo contracted debts amounting to USD 13.1 billion.

Translated by Maryflor Suárez R.
msuarez@eluniversal.com