Foreign debt surges 48.5 percent despite the hike in oil prices

Amidst a dramatic increase of oil prices that has pushed the average price of the Venezuelan oil up from USD 49.63 ending the first quarter of 2007 to USD 89.21 the same period this year, the Central Bank of Venezuela (BCV) reported that Venezuela's foreign debt does not stop growing. The consolidated numbers of the public sector, an indicator that includes state-run oil holding Petróleos de Venezuela (Pdvsa) and other state-owned businesses, show that the foreign debt rose 48.55 percent from USD 29.8 billion to USD 44.3 billion from March 2007 to March 2008. Indeed, between December 2007 and the first quarter of 2008, the burden heightened by USD 4.48 billion. The BCV attributed this result to 'foreign credits contracted by the oil sector and due to a renewed classification by sectors of the liabilities of recently nationalized businesses.' Last year, the government resorted continuously to the issue of bonds to keep under control the parallel exchange rate. This strategy explains most of the foreign debt growth.