Venezuelan national bankruptcy in 2017

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The Venezuelan national bankruptcy of 2017 is the first payment default by Venezuela since the national bankruptcy of 2004 .

background

Venezuela has a long history of national bankruptcies. The literature names payment defaults for the years 1832 , 1848 , 1860, 1865 , 1878 , 1892 , 1898 , 1960 , 1983 , 1990 , 1995 , 1998 and 2004.

Since 2005, the government tried under Hugo Chavez the 21st century socialism introduce in Venezuela. Prices were frozen at a low level to ensure cheap supplies for the population. Since domestic production was no longer worthwhile afterwards, production collapsed and was replaced by imports from abroad. The process was reinforced by extensive nationalizations. This was financed by the proceeds from the oil export. Venezuela is the country with the largest oil reserves on earth. The oil industry was also nationalized. As a result, oil production fell by a quarter by 2017. The trigger for the crisis was the decline in the oil price from 2014. It had risen from $ 17.10 in 2001 to $ 128.38 in 2014. After that, prices fell again and were around $ 50 in 2017.

The result was massive restrictions on imports and mass poverty of the population. The protests in Venezuela since 2014 were crushed, overthrown the freely elected parliament and state institutions into line . Economic output has declined by a quarter since the beginning of the crisis, the inflation rate rose to 700% in 2017 and was over a million percent the following year.

The total external debt in 2017 was around $ 171 billion. This makes the national bankruptcy of Venezuela the largest national bankruptcy in history.

The default

Due to this development, the financial markets expected national bankruptcy. The price of ten-year bonds in Venezuela fell from 54% in January 2017 to 24% in September. A bond of Petróleos de Venezuela in the amount of 1.1 billion dollars due on November 3, 2017 , was not fully serviced, according to creditors. An application was therefore submitted to the International Swaps and Derivatives Association to formally determine the default. The consequence of such a determination is the maturity of the CDS concerned . The CDS premiums for Venezuela rose from 5,000 to 15,200 basis points . On November 7, 2017, Fitch downgraded Petróleos de Venezuela's rating to “C” (credit default).

On November 2nd, President Nicolas Maduro announced that he had ordered a refinancing and restructuring of the foreign debt. Vice-President Tareck El Aissami has been appointed head of a commission charged with negotiating debt restructuring. Tareck El Aissami is on the United States sanctions list for promoting drug trafficking. On November 16, the responsible ISDA committee unanimously declared the failure; since the last quarter of 2017, according to a statement by the Federal Department of Foreign Affairs, "the Venezuelan state is no longer servicing the majority of bonds from the state and the state oil company Petróleos de Venezuela SA (PDVSA)".

Individual evidence

  1. ↑ Juan Carlos Hatchondo, Leonardo Martinez, Horacio Sapriza: The Economics of Sovereign Defaults. In: Economic Quarterly. Volume 93, No. 2, Spring 2007, ISSN  0094-6893 , pp. 166-167 ( PDF file; 0.2 MB ).
  2. ↑ Kenneth S. Rogoff , Carmen Reinhart : This time everything is different. Eight centuries of financial crises. FinanzBook Verlag, Munich 2010, ISBN 978-3-89879-564-7 , p. 150
  3. ↑ John FH Purcell, Jeffrey A. Kaufman: The Risks of Sovereign Lending. Lessons from history. Salomon Brothers, New York 1993 ( DOC file; 0.2 MB ).
  4. ^ Peter H. Lindert, Peter J. Morton .: How Sovereign Debt Has Worked. In: Jeffrey D. Sachs (Ed.): The International Financial System (= Developing Country Debt and Economic Performance. Volume 1). University of Chicago Press, Chicago 1989, ISBN 0-226-73332-7 , pp. 92-97 ( PDF file; 0.8 MB ).
  5. ↑ David T. Beers, John Chambers: Default Study: Sovereign Defaults At 26-Year Low, To Show Little Change In 2007. Standard & Poor's, New York 2006.
  6. ↑ Holger Zschäpitz: The world is threatened with the greatest national bankruptcy of all time; in: Die Welt from April 6, 2017
  7. ↑ Venezuela is facing default; in: FAZ of November 10, 2017, p. 23
  8. ↑ Venezuela just before bankruptcy; in: FAZ from November 3, 2017, online
  9. ↑ Banks declare Venezuela de facto bankrupt; in: SPON from November 17, 2017, online
  10. ↑ Venezuela Economic Report 2017/18 , Federal Department of Foreign Affairs , June 30, 2018