NewsWhore
02-17-2010, 05:00 PM
Economist Bernardo Vega says that the DR could feel the short-term effects of its growing foreign debt. He says the problem is not so much the total of the debt, or its relation to the GDP, or the payments that need to be made against foreign exchange receipts. The problem is that every day a larger proportion of the debt is made up by "hard" loans and short payment terms, high interest rates and reduced grace periods, and because they are for the purchase of goods and services without tender and consequently padded, he explains in a contribution to Hoy today. He says that these hard loans are taken from companies or private banks of a single company that secure the guarantee of their governments. He mentions the Deutsche Bank as one of the leading beneficiaries of this way of operating, which benefits from the guarantees provided by a semi-governmental Spanish agency, as well as those of constructor firms such as Odebrecht, that has the guarantee of the Brazilian state bank, and US loans to suppliers that have been financed by Eximbank, a US government agency.
Vega writes that since the Hipolito Mejia government (2000-2004) this kind of loan has increased, representing 33% of the total non-financial public debt to September.
Furthermore, he mentions that the hard loans include those that are taken with commercial banks, without the guarantees of foreign government agencies, such as the sovereign bonds. He says that these represented 20% of the hard loans and involved short-term repayment plans and high interest rates. Together the hard loans make up 53% of the foreign debt.
Vega observes that in the 1970s and 1980s, the bulk of the foreign debt was made up by multilateral debt, with long-term loans, low interest rates and long grace periods, supported by purchases under international tenders. These were loans from the Inter-American Development Bank, the World Bank, the US Agency for International Development, the European Investment Bank (EIB) and the PL-480 of the US. Those loans currently represent only 26% of the total debt.
Vega comments that the soft loans with PetroCaribe (Venezuela) represent 20% of the total.
Vega also mentions that local indebtedness is also increasing due to the government's practice of issuing bonds and taking out loans with local commercial banks. He said that for every dollar that the government has taken in foreign loans, it has taken 59 cents to the dollar in local debt in pesos.
Overall, he says that the foreign debt with the US is now barely 5.3% of the total debt, compared to 19.8% to Venezuela.
He said that while it took us 50 years to accumulate this debt with the US, the government has taken on 20% of its debt with Venezuela in just 6 years.
Vega warns that 61% of the foreign debt expires within the next 5 years.
He asks out loud: "When will the next renegotiation of the foreign debt come when we do not have in our budget sufficient resources to pay what we already owe?"
More... (http://www.dr1.com/index.html#5)
Vega writes that since the Hipolito Mejia government (2000-2004) this kind of loan has increased, representing 33% of the total non-financial public debt to September.
Furthermore, he mentions that the hard loans include those that are taken with commercial banks, without the guarantees of foreign government agencies, such as the sovereign bonds. He says that these represented 20% of the hard loans and involved short-term repayment plans and high interest rates. Together the hard loans make up 53% of the foreign debt.
Vega observes that in the 1970s and 1980s, the bulk of the foreign debt was made up by multilateral debt, with long-term loans, low interest rates and long grace periods, supported by purchases under international tenders. These were loans from the Inter-American Development Bank, the World Bank, the US Agency for International Development, the European Investment Bank (EIB) and the PL-480 of the US. Those loans currently represent only 26% of the total debt.
Vega comments that the soft loans with PetroCaribe (Venezuela) represent 20% of the total.
Vega also mentions that local indebtedness is also increasing due to the government's practice of issuing bonds and taking out loans with local commercial banks. He said that for every dollar that the government has taken in foreign loans, it has taken 59 cents to the dollar in local debt in pesos.
Overall, he says that the foreign debt with the US is now barely 5.3% of the total debt, compared to 19.8% to Venezuela.
He said that while it took us 50 years to accumulate this debt with the US, the government has taken on 20% of its debt with Venezuela in just 6 years.
Vega warns that 61% of the foreign debt expires within the next 5 years.
He asks out loud: "When will the next renegotiation of the foreign debt come when we do not have in our budget sufficient resources to pay what we already owe?"
More... (http://www.dr1.com/index.html#5)