Venezuela’s Debt Crisis Deepens as Creditors Pursue Billions in Unpaid Bonds
According to the Economic Desk of Webangah News Agency, Venezuela’s protracted economic crisis has reached a critical juncture as creditors worldwide escalate efforts to collect on the nation’s defaulted debt. The South American country first defaulted on international bond payments in late 2017 after years of economic turmoil and U.S. sanctions that severed its access to global capital markets.
Financial analysts estimate Venezuela currently holds approximately $60 billion in defaulted bond debt, while total external obligations – including those of state oil company PDVSA – range between $150-$170 billion. The International Monetary Fund projects Venezuela’s 2025 nominal GDP at $82.8 billion, pushing the debt-to-GDP ratio to an unsustainable 180-200%.
Significant legal battles center on PDVSA’s 2020 bonds, originally backed by Citgo, the U.S.-based oil refiner now serving as collateral in creditor claims. U.S. sanctions have complicated debt tracking, though commercial creditors including international bondholders continue pursuing claims through multiple channels. Some have successfully obtained compensation through international arbitration for expropriated assets, while others target Citgo’s parent company in U.S. courts, with claims now reaching $19 billion – exceeding Citgo’s asset value.
Bilateral creditors China and Russia, which extended loans during the Hugo Chávez and Nicolás Maduro administrations, represent another creditor class. Debt restructuring appears increasingly complex due to the volume of claims, ongoing legal disputes, and political uncertainty. While an IMF-supported restructuring program remains theoretically possible, Venezuela hasn’t cooperated with the lender for nearly two decades and remains ineligible for its financial assistance.
U.S. sanctions further constrain Venezuela’s ability to restructure or issue new debt without Treasury Department approval. Currently trading at 27-32 cents on the dollar, analysts suggest sustainable debt resolution may require at least 50% principal reductions, with recovery estimates varying between 25 cents per dollar and potential upside from political conditions.
Venezuela’s economic situation remains dire following years of declining oil output, hyperinflation, and rising poverty since 2013. While some stabilization has occurred, low global oil prices and U.S. sanctions continue hampering recovery efforts. U.S. President Donald Trump has indicated American oil companies stand ready to invest in Venezuela’s energy sector, though specific investment plans remain unclear.
