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Andean Group - April 2011 (ISSN 1741-4466)

ECONOMY: Venezuela's debt a non issue?

There has been a lot of noise lately about Venezuela's mounting public debt level, which has more than tripled since 1998 (from US$28.4bn) to reach somewhere between US$115bn and US$125bn at the end of 2010, depending on the estimate, taking it to nigh on 50% of 2010 GDP, which is almost double the Latin American average. In the bigger scheme of things, Venezuela's debt position, and its ability to pay, still compares very favourably with the likes of the new European Union 'basket cases', like the effectively bankrupt Greece and Ireland, where the debt/GDP ratios are a staggering 168% and 111% respectively, and even the US, where the ratio is now about 95%. More notable perhaps is that China is now by far Venezuela's largest creditor; if a pending new US$10bn housing loan is secured, Venezuela will be in hoc to the Asian giant to the tune of US$42bn. Whether that's payable in cash or in future oil shipments is neither here nor there, given the Venezuelan treasury's utter dependence on the lifeblood oil export sector.

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