CARACAS, Venezuela, June 2 (UPI) -- Venezuela faces a soaring public debt as the government struggles to keep pre-election promises to the citizens amid rising state expenditure and declining oil exports, official data indicated.
Venezuelan President Hugo Chavez has lavished increasing state spending on a series of programs that aim to fulfill poverty reduction pledges made over several years but left unfulfilled due to a combination of political squabbling, drought and chronic electricity and water shortages.
Chavez has compounded financial pressures on his administration through a series of rushed nationalizations of foreign-controlled companies that led to massive compensation claims, a drain on state treasury.
The El Universal newspaper said Venezuela earned more from oil exports due to the recent peaks in crude oil prices but the increased revenue fell short of expenditures.
"Despite increasing oil revenues, the government needs funds and has requested public entities to grant more money," said the newspaper, which is often critical of both the executive and the opposition.
The crude oil prices of $96 a barrel or more helped Caracas accumulate revenues of at least $70 billion but that failed to match the mounting expenditure, much of it geared toward garnering votes for Chavez in the 2012 presidential election.
Chavez is seeking a third six-year term in office but is increasingly under pressure from an economy in recession, financial and industrial chaos because of international developments and the government's own handling of ill-timed measures to regulate the economy, more than half of it informal and "underground."
Interventionist policies by state planners dampened economic growth in Venezuela last year and the country entered recession in 2011 despite defiant government projections of growth and a swift end to the slowdown.
The nationalizations have frightened investors away. The government's style of dealing with foreign entrepreneurs has turned out to be a long-term disincentive.
The government has already borrowed heavily through bond issues. Total bond issues this year could exceed $23.6 billion, taking the public debt to $112.6 billion.
That total includes the public sector debt, including debt from the central government, state-run Petroleos de Venezuela, basic industries and a loan from China.
A report from Ecoanalitica economic research firm said Venezuela's total public debt could be exceeding $134 billion this year.
Venezuela devalued its currency earlier this year and slapped more taxes on oil companies to increase the government's intake of funds from oil proceeds.
Venezuela is facing additional difficulties in what used to be a stable oil trade with the United States. Chavez began courting Iran in 2009, signing a series of contracts for oil, mineral and industrial collaboration. But now those deals have drawn U.S. sanctions, complicating Venezuela's efforts to ensure smooth running of its oil industry. Oil exports suffered when state nationalization and large-scale layoffs hit the hydrocarbons industries. U.S. sanctions may impact on maintenance of the oil industry equipment and machinery.
Recent protest rallies against the U.S. sanctions led to heated exchanges, causing the media to question the wisdom of aggravating ties with U.S. oil importers. Further problems in ties with Washington would remove another source of foreign exchange earnings while the state-run PDVSA increasingly promotes oil for goods with developing countries.