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Latin America
Related: About this forumVenezuela after Chavez: An economy on the verge
http://finance.yahoo.com/news/venezuela-chavez-economy-verge-130000150.htmlLess than a year after the death of former dictator Hugo Chavez , Venezuela is on the verge of an economic breakdown. Inflation is soaring; the currency, the bolivar, is drastically losing value on the black market; and foreign currency reserves are dwindling. Even Venezuela's once vaunted energy sector, crippled by lack of investment, is failing to generate enough revenue to subsidize domestic giveaways.
This month, hundreds of people across Venezuela clamored to get into electronics stores-some of them occupied by soldiers-after the government ordered merchants to cut prices. Soaring inflation has put appliances and other goods beyond the reach of most of the population. Rather than acknowledge what most experts agree is the role of governmental policies in causing rampant inflation, President Nicolás Maduro pointed the finger at retailers themselves.
Replicating the Chavez style, Maduro has blamed the private sector for the country's problems, and last week the government signed a decree capping profit margins and further tightening import regulations. His moves drew praise from supporters, but condemnation from critics of the government.
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Venezuela now runs a public sector deficit of about 15 percent of gross domestic product, according to Moody's. (In comparison, the U.S. federal deficit stands at 4.1 percent of GDP in 2013, down from 6.8 percent last year.)
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Oil production at Petróleos de Venezuela (PDVSA) has declined from a peak of 3.5 million barrels a day to about 2.5 million barrels a day.
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Venezuela after Chavez: An economy on the verge (Original Post)
Bacchus4.0
Nov 2013
OP
Benton D Struckcheon
(2,347 posts)1. In my inbox this morning,
from the Financial Times:
Nervous oil traders fixated on Venezuela risk
By Ajay Makan
After a year of huge and unforeseen disruptions to oil supplies from Libya to Nigeria, optimism is growing that 2014 will be a year of plenty following the breakthrough agreement on Irans nuclear programme.
But within the oil industry, nervous traders are increasingly fixating on a fresh source of supply risk Venezuela .
Since 2007 China has committed to lend Venezuela more than $40bn, which has helped keep the economy afloat. But traders say PDVSA is struggling to supply the more than 300,000 barrels a day of exports required under the agreement, while still generating export revenues by selling elsewhere.
It is a matter of time before Venezuela defaults on its loans to China and without more cash the government will struggle to pay wages and there will be chaos, says one senior trader, who says the market should be factoring in a significant reduction in Venezuelan output next year.
The government is adding to PDVSAs indebtedness as the countrys economic problems mount
Crude oil output, although down from more than 3m b/d when Mr Chávez took power in 1999, to less than 2.5m b/d today, according to the International Energy Agency, is still almost 3 per cent of global production.
Disruptions in Caracas would tighten the global supply picture, forcing leading buyers of Venezuelan crude to scramble to secure similar quality heavy crudes. As well as China, the US imports around 800,000 b/d of Venezuelan crude, much of which is blended with lighter domestic shale production for use in refineries.
By Ajay Makan
After a year of huge and unforeseen disruptions to oil supplies from Libya to Nigeria, optimism is growing that 2014 will be a year of plenty following the breakthrough agreement on Irans nuclear programme.
But within the oil industry, nervous traders are increasingly fixating on a fresh source of supply risk Venezuela .
Since 2007 China has committed to lend Venezuela more than $40bn, which has helped keep the economy afloat. But traders say PDVSA is struggling to supply the more than 300,000 barrels a day of exports required under the agreement, while still generating export revenues by selling elsewhere.
It is a matter of time before Venezuela defaults on its loans to China and without more cash the government will struggle to pay wages and there will be chaos, says one senior trader, who says the market should be factoring in a significant reduction in Venezuelan output next year.
The government is adding to PDVSAs indebtedness as the countrys economic problems mount
Crude oil output, although down from more than 3m b/d when Mr Chávez took power in 1999, to less than 2.5m b/d today, according to the International Energy Agency, is still almost 3 per cent of global production.
Disruptions in Caracas would tighten the global supply picture, forcing leading buyers of Venezuelan crude to scramble to secure similar quality heavy crudes. As well as China, the US imports around 800,000 b/d of Venezuelan crude, much of which is blended with lighter domestic shale production for use in refineries.
It's time to stop the fingerpointing and start governing like an adult.
Bacchus4.0
(6,837 posts)2. unfortunately most politicians haven't reached adult status
The desire to retain power is preeminent to sane governance.