Sunday, September 24, 2006

Putting the house in order and filling up the piggy bank 

More good financial news from Venezuela.

First Venezuela's debt continues to decline. The Venezuelan finance minister was quoted in Panorama newspaper as pointing out Venezuela's total debt will decline by about 10% this year. This results from in 2006 Venezuela paying down the debt by over $4 billion dollars. Currently Venezuela has a foriegn debt of $31.1 billion dollars and an internal debt of about $15.5 billion for a total debt of $46.6 billion. By years end, after reducing the debt through things like Brady Bond buybacks, the total debt will be about $41 billion.

This will reduce Venezuela's total debt to about 23% of GDP, down from the 30% that Chavez inherited. For comparison's sake the U.S. national debt is about 75% of GDP.

Second, the national development fund, Fonden, which is respsonible for a lot of the public works which we have been looking at recently, recieved another deposit of $1.1 billion from the state oil company PDVSA this past week. This gives Fonden a balance of $17 billion dollars. Needless to say Venezuela can look foward to lots more public works. And that $17 billion along with the $35 billion in the Central Bank's foriegn reserves gives Venezuela quite a piggy bank to fall back on should they need to.

Lastly, in today's edition of El Universal we see that the much maligned purchase of Argentinian bonds by Venezuela has turned out to be quite profitable. Apparently the Venezuelan government has sold 70% of those bonds and made a nice profit of over $300 million dollars. Maybe they'll use some of that money to build yet more schools or health centers.

In summary it is nice to see the very favourable trends highlighted here continueing unabated.


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