Monday, July 17, 2006

Economic Notes: Non-oil exports boom and debt goes down 

The good economic news in Venezuela keeps coming fast and furiously, so much so that this blogger can hardly keep up with it.

First on the old news front non-oil, non-oil related, and non - iron exports are up 62.5% in the first 6 months of 2006 compared to the first 6 months of 2005 - the increase was from $4.6 billion to 7.6 billion dollars. So while the opposition likes to keep asserting that all that Venezuela is experiencing is an oil boom these stats give lie to that - Venezuela's non-oil exports are booming. The following chart gives a breakdown for these exports by region.

Then today came more good news. Venezuela's national debt in relation to the size of its economy has been falling recently and is now below the level of when Chavez first came to office. As the following graphic shows the national debt is 26.7% of GDP in May whereas it was 30% in 1998 right before Chavez came to office.

Further it is clearly trending downward significantly. And by way of comparison, U.S. Federal government debt as a percentage of GDP is about 70%.

And while Venezuela still has significant outstanding debt there are two other factors that make the situation even better than what this graph shows. First, I am virtually certain this debt is only debt held by the government directly and doesn't include the debt which the state oil company had, about $7 billion, which has now been almost entirely paid off. If that were taken account of, as it should be that debt of a state owned company is in effect government debt, then the Chavez administrations performance is even more impressive.

The second factor is that this decline in debt in relation to the economy is that it doesn't take into account the assets the Venezuelan government has built up - namely its foriegn reserves. As the following graph shows those reserves were less than $15 billion when Chavez came to power but are now more than double that at over $32 billion dollars.

So that means the Venezuelan governments net financial position is better yet - in fact its foreign reserves are greater than its foriegn debt. Wonder when the last time that happened was?

To summarize: Under Chavez non-oil exports are booming, debt is declining relative to the size of the economy, and reserves have more than doubled. A pretty impressive track record!


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