The Economist // Could Venezuela really go bankrupt?

[naaman fletcher]

The chief cause of Venezuela's travails has been Chavez' pillaging of PDVSA, the state oil firm. He has packed it with loyalists, starved it of investment and used it for social spending, cutting its output from 3.3 million barrels per day in 1998 to around 2.25 million, according to industry estimates.

Of that, some 1 million is sold at subsidized prices at home or to regional allies, leaving just 1.25 million barrels per day for full price exports.

Meanwhile, the president's hostility to business has devastated the rest of the economy. He has nationalized hundreds of companies and trumped up charges against their owners, causing much of Venezuela's private sector to shut up shop and flee.

As a result, the country has seen vast capital flight, and must import many goods that it used to produce. Non-oil exports have ground to a halt: Petroleum now accounts for 92% of its dollar intake.

http://www.vheadline.com/readnews.asp?id=101392