CARACAS, Thursday February 28, 2013 | Update

Venezuela is the only petro-state with a debt over 50% of the GDP

Venezuela is back to the indebtedness period of the 1980s

Unable to borrow any further to expand expenditure, the government has devaluated again the local legal tender (File photo)
Thursday February 28, 2013  12:43 PM
Fully aware of the high volatility of oil prices, most petro-states, except for Venezuela, have been prudent during this protracted oil boom; set up  savings funds and kept their debts at comfortable levels.

Based on statistics from the International Monetary Fund, Venezuela's debt by the third quarter of 2012 accounted for 51% of the gross domestic product (GDP).

Most petro-states have focused on bringing down their debt, namely Saudi Arabia from 65% of the GDP in 2004 to 5.5% in 2012; Kuwait, from 18.5% to 7%; Iran, from 25% to 11%; Angola, from 54% to 28%; and Nigeria, from 53% to 15%.

It is worth noting that Venezuela's recent devaluation of the bolivar at nearly 46% leads to a heavier burden of the debt as the GDP measured in US dollars drops and in practice more bolivars are required to pay liabilities in US dollars. 

Today, Venezuela's debt amounts to 70% of the GDP.

From 1974-1977 and then from 1979-1981, oil prices skyrocketed, bringing high income in turn. Amid high expenditure, the country ended up taking on large debts that resulted in a heavy burden in view of the country's GDP. When oil prices plunged, international banks stopped financing Venezuela and the poverty rate soared.

Similarly, Hugo Chávez's government has raised its debt amid high oil prices, the highest ever seen. Indeed, the Venezuelan oil basket averaged USD 100 per barrel in 2011-2012.

Translated by Jhean Cabrera
Gagging Twitter users

Pablo Jiménez Guaricuco was summarily dismissed from his Clerk III job at the Autonomous Service of Public Registries and Notaries' Offices (Saren). He read a notice published in a newspaper on November 5 informing the public that he was no longer employed to the Saren. He was sacked despite the fact that he was taking a leave of absence from work due to a work-related accident, and that he enjoyed security of employment under the parental job-immunity privilege. Most probably, the decision was influenced by his role as a union organizer. But what did he do, besides leading protests, to deserve the sack? Well, he allegedly sent off a series of tweets that definitely hurt the sensitivity of the Saren Directorate.

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