Devaluation increases Venezuela's debt burden on the economy
Non-recorded debt amounts to USD 25.4 billion Pressured by the
growing gap between expenditure and income, it is very likely
that the Venezuelan Government devaluates the local currency
(bolivar) in 2013. Such an action may increase the amount of
bolivars it will receive per the so-called petrodollars, yet
this may bring about negative effects on the State's accounts as
the burden of the country's debt will increase. A higher impact
of the debt on the economy means that the market will increase
its risk perception and the country will end up paying higher
interest rates to obtain new financing. Likewise, the principal
amount payable and accrued interest demands a larger portion of
the budget, lessening funds for health, education, and
infrastructure. University professor and economist José Guerra
along with his colleague, Luis Oliveros, has evaluated the
debt's trend to explain how devaluation eases the burden of the
debt in local currency. Accordin