Venezuela says it nearly paid off debt to Colombia

[Judi Lynn]

Venezuela says it nearly paid off debt to Colombia
Tuesday, 04 January 2011 21:29 Adriaan Alsema

Venezuela falls short $100 million to have completely paid off its debt to Colombian exporters, a Venezuelan government official said Tuesday.

In an interview with Spanish press agency Efe, Manuel Barroso, head of the Venezuelan Currency Administration Commission (Cadivi) said that after a revision to filter "simulated imports," "overbilling and other perversions in order to obtain (foreign) currency," the Venezuelan government concluded importers did not owe $800 million, but $600 million to Colombian businesses.

The debt was caused when -- following clashes with Colombia's then-President Alvaro Uribe -- Venezuelan President froze trade with Colombia in July 2010 and Venezuelan importers stopped paying outstanding debts to Colombian exporters.

After Colombia's current President Juan Manuel Santos and Chavez took the first steps to normalize relations, Venezuela began revising and paying these outstanding debts.

More:
http://colombiareports.com/colombia-news/economy/13585-venezuela-says-it-nearly-paid-off-debt-to-colombia.html

[social_critic]

1. Venezuela owes a lot of money everywhere

The Venezuelan government has been incurring a lot of "informal" debt, the debt owed to Colombia is just the tip of the iceberg. By "informal" I mean they don't borrow the money, they just refuse to pay what they agreed to pay for products. They are becoming famous for being such lousy clients, those who sell products to the Venezuelans are asking for large markups. Which is one reason why Venezuela is having so much inflation. In the end, the Venezuelan people pay because their government doesn't pay its bills on time.

[mudplanet]

2. Well, if they could get the US to give them $562 million a year like they do to Colombia they

could make their payments on time.

http://www.reuters.com/article/idUSTRE6054DT20100106

[social_critic]

3. If they had a responsible government they could make payments on time

Their behavior isn't dictated by the lack of US aid, it's dictated by their own behavior, which can be considered highly irrational.

At the same time they mismanage their cash flow and fail to pay their debts on time, they continue to issue bonds - and pay really high interest rates because the market thinks they're not reliable (which they show when they don't pay when they are supposed to).

They also continue to waste money by purchasing weapons they will never use, donating to political parties in other countries, and subsidizing governments in Cuba, Nicaragua, etc. Furthermore, they have mismanaged the oil industry to such an extent the country no longer produces the oil at the rates it used to (and it has been forced to import natural gas from Colombia!), and on top of that it has discouraged investment in other sectors, destroyed productive capacity in the metals and cement industries, and maintained an irrational exchange rate which discourages national production in all other sectors.

It has allowed a huge crime rate to increase to such an extent tourism to Venezuela is almost non existent, and it has allowed infrastructure to deteriorate, making roads impassable and the national electricity grid a disaster. It carries out haphazard and arbitrary nationalization of property, farms, and businesses, which means nobody is investing anymore.

And it subsidizes fuels to such an extent that gasoline is almost free. And who uses the most gasoline? The guys with the large cars.

Conclusion? They're a bunch of incompetents.

[social_critic]

4. Additional Information: Venezuela rated highest default risk after Greece

The latest ratings show Venezuela has the highest risk of default in the world, after Greece. The State of Illinois is in the top 10 as well, in case any of you are holding their bonds. US bonds continue to be rated among the highest ranked bonds, which explains why they pay such a low interest rate.