Venezuelan debt

Venezuelan Finance Minister Nelson Merentes has said the Venezuelan Government will pay off $4.7 billion of foreign debt in 2006. Merentes said this is to, “free up money that can be invested by the government to spur economic growth.”

The majority of the debt being paid off is made up of $3.9 billion in Brady Bonds. Another $600 million comes from 15 private banks. The remaining $243 million is from the World Bank. On March 1, $700 million worth of Brady Bonds were bought.

Brady Bonds, named after former US Treasury Secretary Nicholas Brady, were created in 1989 to respond to the inability of many Latin American countries to pay their foreign debts. The Brady Bonds were supposed to make debt repayments more flexible.

Once completed, the Venezuelan pay off should see total national debt fall by 15.2%, to $26.3 billion. Merentes says the government aims for Venezuela’s debt to be lower than 25% of Gross Domestic Product, or GDP, by the end of 2008.

Venezuelan national debt grew during 7 years of high public investment on welfare programs, a devastating oil strike in 2003 as well as general political instability. From the beginning of Chavez’s Presidency in 1998 to the end of 2005 public external debt increased from $23.3 billion to $31 billion.

By the way, I'm working today on a little hardcopy article on Venezuela for a Latin American studies news outfit. I don't think there's any reason why it couldn't be posted too, except if it's redundant to other posts. I'll try to get it out later today or tomorrow.