Foreign debt up 9.6 percent in the first half

The first week of August, the Venezuelan government bought USD 1 billion in Argentinean debt bonds, and ten days later President Hugo Chávez announced he would give Bolivia USD 300 million for the construction of a road. It might appear that Venezuela does not need funds, but according to data from the Venezuelan Ministry of Finance, in the first half this year, Venezuelan foreign debt climbed USD 2.63 billion (9.6 percent), from USD 27.31 billion in December 2007 to USD 29.95 billion at the end of June 2008. While domestic and foreign debt do not represent a significant burden compared to the size of Venezuelan economy -in fact, they amount to some 18 percent of GDP, the lowest ratio in the region-, analysts underline that the Venezuelan debt obligations are soaring while revenues are growing as well.
Between December 2007 and June 2008, the price of the Venezuelan oil basket climbed 45 percent, from USD 81.80 per barrel to USD 118.98. Noteworthy is that, based on historical statistics, anytime oil prices fall, GDP runs out of steam, like a balloon losing air, whereas the debt burden increases dramatically.