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Venezuela's total debt tantamount to 97% of GDP of 2017

Analysts of think tank Torino Capital tally a total of USD 193 billion in liabilities; they put the Gross Domestic Product (GDP) this year at USD 199 billion

  • YVONNE AYALA PERDOMO

07 de febrero de 2017 06:48 AM

Actualizado el 08 de febrero de 2017 10:40 AM

PARA COMPARTIR

“A government that racks up an excessive amount of total debt is likely to sooner or later end up failing to comply with part of it,” Torino Capital cautioned.

The Venezuelan State should honor USD 193 billion in both domestic and foreign debts, accounting for about 97% of the Gross Domestic Product (GDP), financial agency Torino Capital reckons.

“Total debt amounts to 97% of our estimated 2017 GDP of USD 199 billion. If we compare the debt figure to an estimate of long-run GDP based on the long-run relationship between exports and GDP in dollars, we estimate a debt ratio of 129% of GDP,” they broke down.

“We tally a total of USD 193 billion in liabilities, of which USD 139 billion are external, USD 11 billion are local holdings of dollar-denominated debt, and USD 43 billion are internal. Total debt amounts to 97% of our estimated 2017 GDP of USD 199 billion. If we compare the debt figure to an estimate of long-run GDP based on the long-run relationship between exports and GDP in dollars, we estimate a debt ratio of 129% of GDP,” they spelled out.

While Venezuelan authorities have clearly expressed their willingness to make timely payments, “a government that racks up an excessive amount of total debt is likely to sooner or later end up failing to comply with part of it,” Torino Capital cautioned.

Nonetheless, “net debt denominated in VEF has in fact fallen from 63 to 24% of GDP since 2014. We expect that trend to continue and believe it will fall to 10% of GDP in 2017. If we add in FX arrears, then the number rises to 41% in 2016 and an expected 22% in 2017. In dollar terms, we believe that internal debt will reach $42.9bn in 2017, of which more than half will correspond to FX arrears,” the experts pointed out.

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