How Serious Are Venezuela's Economic Problems?

 The problem for Venezuela is that falling oil prices means that Maduro needs to hand over more oil to creditors. Yet, his government still provides generous subsides for local consumption. “In effect, the one-third decline in the price of oil means that the state oil company must either raise or divert enough production because Venezuela effectively owes China 67 million barrels of oil, roughly 27 million more than it did before, for this loan alone. And there are billions of dollars in other loans to consider. This suggests the importance of something else missing in the speech–a convincing plan to reduce domestic consumption, now taking up at least a quarter of production,” Hellinger explained.  More…