Public sector debt estimated at USD 149 billion
In six-day term, the government and Pdvsa's debt spikes to 225%
Against a backdrop of higher income, the Venezuelan government is seeking again additional indebtedness; the reason for it is the expanded public spending. The need to meet the requirements of government agencies and state-run companies has led the administration of Venezuelan President Hugo Chávez to resort to every available funding source.
This week, government authorities will submit to the National Assembly a Supplementary Indebtedness Law for USD 6.9 billion. Such liabilities, together with the parent debt scheduled by the Ministry of Finance, the bonds issues of state-run oil holding Petróleos de Venezuela (Pdvsa) and the loans contracted from foreign countries, will end up thickening the total public debt by 16%.
Barclays Capital estimates that ending 2012, the public sector debt (central government, Pdvsa and loans from China) will amount to USD 149 billion compared with USD 128 billion at the end of 2011. And while Venezuelan oil prices still average over USD 100, the government has opted to keep a strenuous indebtedness policy due to the accelerated expenditure.
For the sake of spending
In the first half of 2012, the Venezuelan government recorded a real increase of 24%. This implied a disbursement for USD 40 billion. For the second half of 2012, outlays, particularly transfers (wages and social welfare programs, among others) will be much higher in view of the election campaign.
Last year, the Executive Office requested an additional indebtedness for the social welfare programs known as "missions." This time, it will seek another law for pension funds and severance payments.
José Vicente Rangel clearly said: "We are not conducting negotiations threatened with a gun in the head." He warned behind closed doors in the midst of the social upheaval occurred during the oil strike in 2002 and 2003. Dissenting Timoteo Zambrano answered back that no other option was available: "The thing is that otherwise, you do not negotiate."