VENEZUELA ON THE BRINK OF BANKRUPTCY

According to the International Monetary Fund, inflation will hit 650 percent this year and a whopping 2,300 percent in 2018. The country  has failed to make about $ 200 million in loan repayments. For Standard & Poor’s the country is in “selective default.” Experts worry this is the first sign that Venezuela’s wobbly economy is close to full collapse. The whole country of Venezuela is bankrupt.

Today, the country owes about $150 billion to creditors, while its central bank has just $9.7 billion in foreign reserves and needs to pay back at least $1.47 billion in interest on various bonds by the end of the year and another $ 8 billion in 2018

The state oil company PDVSA has defaulted on its debt.

Russia and China are the two main creditors and allies of Venezuela, which owes them an estimated $8 billion and $28 billion, respectively. About 70 percent of Venezuelan bondholders are North American, according to government figures, and there are about $60 billion in PDVSA and sovereign bonds outstanding. Venezuela’s situation is unique from other countries that have faced a debt crisis: it is simultaneously riven by a political crisis and is facing U.S. financial sanctions, an arms embargo imposed by the European Union, and even a call by Argentina for an oil embargo. The sanctions from Washington, which has labeled the Maduro regime a dictatorship, are particularly problematic since they prohibit U.S. individuals and banks from buying new Venezuelan bonds, a requirement for any debt resolution. Venezuela has valuable assets in the U.S. at risk of seizure, including oil exports and Citgo with its three refineries, owned by PDVSA. The nation depends on PDVSA’s oil exports for about 90 percent of its foreign exchange earnings, but those earnings have been falling sharply due to lack of investment to update infrastructure even as oil prices have recovered.