Aw rats, another $1 billion debt

These things just keep turning up. From Correo del Caroní‘s generally reliable Natalie Garcia. Workforce now to be cut from 2,000 at beginning of year to 1,200:

More firings announced in third bridge project

The Brazilian construction company Norberto Odebrecht, in charge of the project Bridge III over the Orinoco, which will connect Bolívar state and Guárico, made the decision to fire 500 laborers in coming days for lack of budget, union sources say… 300 fathers and mothers were tossed off the jobsite at the beginning of 2010 for the same reason.

Norberto Odebrecht, the Brazilian company in charge of the project, has run into financial problems since 2008 because the Public Works and Housing Ministry doesn’t release the required money.

Up to now, the state owes the contractor, $250 million from 2009 and $750 million corresponding to the 2010 budget, for a total of $1 billion, just for this project.

Odebrecht is also … developing part of the Caracas metro, the El Diluvio reservoir in Zulia… Union officials doubt the bridge can be inaugurated on time in 2012… In addition the Alumunim City and the train are suffering delays for lack of budget.

Assuming this report is right: I don’t get is how the government can remain behind on so many payments with oil above $80, even as foreign reserves fall. Is it all part of a clever and sustainable plan, in which human needs get covered before corporate greed? Or is this a pyramid scheme collapsing?

4 thoughts on “Aw rats, another $1 billion debt

  1. Nathaniel

    After reading the CERP report it is pretty clear the issues the said were of concern have failed to be corrected and underlying circumstances have changed in ways they did not foresee. Three major changes have occurred that are not predicted by the report. First they downplay the likelihood of any additional nationalizations. Second they see low levels of debt which have skyrocketed( the recent china loan almost eqeals the debt at the time the report was written). And finally they are concerned with the exchange rate but believe the government can control it.
    I would not trust the report to still be accurate for the future.

  2. sapitosetty Post author

    To be clear, I linked to it more as an example of the kind of analysis one can do if one starts with the assumption that the government is rational and progressive, rather than irrational and corrupt. It’s definitely outdated.

  3. pjk

    my money’s on pyramid scheme. take away every independent institutional check-and-balance from an entity with gazillions of dollars in cash flowing in every year and one way or another the money’s going to disappear. Tricks like depreciating the currency by 100% against the dollar so you have twice as much cash to pay workers only work for so long. Just waiting for the other shoe to drop.

  4. Paul Escobar

    I’d love to see some sort of exchange between you & Mark Weisbrot (CEPR). I don’t want to say you’ve dissed the guys work, but I think you’d raise some great issues.

    I know he doesn’t have a fragile ego.
    Personally, I’ve seen him face less receptive audiences (looks like Jerry Springer in the last 10):

    On another note, he published a general op-ed about Venezuela recently:

    I guess he’s still in the “rational and progressive” camp.

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