Venezuela's foreign debt breaks USD 102 billion ceiling
Skyrocketing government expenditure is weakening public finance
Public spending is vital to fund housing programs and boost consumption. Over the last 12 months, the central government's spending, after inflation, has climbed by 26%. High oil prices and tax collection have failed to meet growing spending. Therefore, the government has been forced to issue new debt bonds.
Central bank's data indicates that, for the first time ever, by the end of the third quarter Venezuela's foreign debt broke the USD 100 billion ceiling. It currently stands at USD 102.3 billion, jumping 103% in four years and USD 5.5 billion in July-September only.
Likewise, debts to the Venezuelan banking system skyrocketed amidst constant bond sales. According to Barclays Capital, considering the size of the economy, Venezuela's debt both in US dollars and local currency (bolivars) will account for 51.6% of the GDP, therefore, doubling the figure recorded in 2008.
Although the debt-to-GDP ratio is still manageable, debt is growing at an unsustainable speed. Apparently, Hugo Chávez' Government will have to cut expenditure and adjust the fixed foreign exchange rate in order to bridge the gap between expenditure and income, which according to some estimates, fluctuates between 15-19% of GDP.
Adopting such steps will bring down economic growth in 2013.
Translated by Jhean Cabrera
A simple reason: there is oil galore, would suffice to explain Guyana's actions. Another explanation lies in the little or none efforts made by the Venezuelan government to thwart the move by the Guyanese. This is certainly not a new problem, but a problem only recently highlighted because oil is involved. But what other resources does the disputed area hold? For most of us it is a section on the map with black and white stripes on it, a depiction of something distant, alien, a nothingness not worth paying much attention to in geography classes back in elementary school.