Venezuela, out of cash, starts tapping lines from China and Brazil
Take this as a sign similar to Countrywide's tapping a multibillion dollar trade line right before everything hit the fan. Venezuela is already in a fiscal crisis. China and Brazil amongst others are offering trade lines to be repaid in oil. That bodes ill for the near future as they won't be geting paid for their oil. I'd like to say good riddance to Chavez, but I'm too smart to know that he will never leave power peacefully. When he leaves, either by force or the hand of God, Venezuela will be much poorer, via Bloomberg:
Venezuelan President Hugo Chavez tapped $19.6 billion of government development funds last year after oil revenue plunged and drove the OPEC nation into its first recession since 2003, according to the Finance Ministry.
Chavez spent $7.2 billion of a $12 billion fund created with China last year and $12.4 billion from the off-budget development fund known as Fonden, a report on the ministry’s website says. The government issued 37 billion bolivars ($8.6 billion) of local and international debt to compensate for a 67 percent plunge in oil revenue, boosting the country’s overall debt-to-GDP ratio to 17.2 percent from 13.8 percent.
“The savings accumulated between 2005 and 2008 have been declining and a good part of that was spent in 2009,” said Juan Pablo Fuentes, an economist at Moody’s Economic.com in West Chester, Pennsylvania, in a phone interview. “Now the ability to spend dollar savings is even more restricted.”