Venezuela Selectively Defaults on Domestic Debts

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The government of Nicolás Maduro has decided to selectively default on Venezuela’s domestic commercial debt, economists and analysts told AFP on Wednesday. It has kept up payments of external debts, on its sovereign bonds, and those of state-run oil company Petróleos de Venezuela S.A. (PDVSA), in order to avoid the asset seizures like those experienced by Argentina when it refused to pay US creditors.

According to former Central Bank of Venezuela manager José Guerra, Venezuela has not been able to pay its debts with importers of automobiles, auto parts, medical supplies, chemicals, and airlines that exceed US$14 billion.

The government had promised to make US$42 billion available to meet demands in production, food, health, and education, but many now question whether those funds actually exist. The government says PDVSA oil exports bring in US$100 billion a year, but the company still has not published its 2013 audit statement.

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Francisco Ibarra, an economist with the consulting firm Econometrica, said the ruling Chavistas must change course, but since taking office 13 months ago, Maduro has consistently avoided taking unpopular measures to curb the ballooning deficit, currently running at an estimated 15 percent of GDP.

Source: Yahoo! News.

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