The Venezuelan government confronts a looming default on $170 billion in foreign debt as inflation, currency collapse, and dwindling oil revenues undermine its ability to service obligations. Global creditors brace for potential restructuring or partial write-offs.
- Venezuela’s sovereign debt totals $170 billion, with $45 billion in Eurobonds and $38 billion owed to Chinese state lenders.
- Oil production has declined to 700,000 barrels per day, severely limiting revenue for debt service.
- Inflation exceeds 10,000% annually, and the bolívar has lost over 99% of its value since 2010.
- A full default could result in creditor losses exceeding 60% on outstanding bonds.
- The IMF estimates Venezuela’s debt-to-GDP ratio at 350%, among the highest globally.
- Credit rating agencies have placed the country in selective default status.
Venezuela’s sovereign debt burden, totaling $170 billion across multiple bond tranches, is on the brink of default due to systemic economic failure. The country’s reliance on oil exports—now averaging just 700,000 barrels per day, down from over 3 million in 2010—has eroded foreign exchange reserves essential for debt servicing. With inflation exceeding 10,000% annually and the bolívar nearly worthless, the government has suspended payments on several international bonds since 2021. The $170 billion debt portfolio includes $45 billion in Eurobonds issued between 2017 and 2020, $38 billion in bonds held by Chinese state lenders, and $32 billion in obligations to multilateral institutions such as the Inter-American Development Bank. Despite a 2023 debt exchange program that restructured $22 billion in bonds, new defaults have emerged on the remaining tranches, particularly those with maturities in 2025 and 2026. Market analysts warn that without a comprehensive restructuring deal, creditors may face losses exceeding 60% on their holdings. The International Monetary Fund has estimated that Venezuela’s external debt-to-GDP ratio stands at 350%, making it one of the most overleveraged economies in the world. A full default could trigger broader credit market instability in Latin America and affect investors with exposure to emerging market debt. The impact extends beyond financial markets. A default would further isolate Venezuela from international capital flows, delay infrastructure projects, and deepen humanitarian challenges. Credit rating agencies have already downgraded the country to selective default status, and international investors are increasingly avoiding any new exposure. The government continues to negotiate with a creditor committee led by European bondholders, but progress remains stalled.