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Venezuela's billion-dollar debt with Brazil, which already exceeds 1,6 billion dollars, continues to grow, compromising diplomatic and economic relations. This amount could be used to build thousands of schools and daycare centers on Brazilian soil, but it remains at risk due to the political crisis in Venezuela.
Imagine what could be done with billions of dollars. Daycare centers, schools, hospitals… However, this amount is far from benefiting Brazil.
What few know is that this impressive amount is trapped in a complex web of international debts. THE Venezuela, immersed in its internal crisis, accumulates a billion-dollar debt with Brazil.
This situation, which has lasted for years, has become a true financial nightmare, and the amount in question is enough to build more than two thousand daycare centers and schools on Brazilian soil. But what led to this gigantic debt, and why does it continue to grow with no prospect of resolution?
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The value of the debt and its origin
On May 31, 2024, the company's debt Venezuela with Brazil reached 1,6 billion dollars, according to the Ministry of Finance. This value reflects a series of financing operations aimed at exports of goods and services by Brazilian companies. The amount, which initially was 1,3 billion dollars in July 2023, increased by 300 million dollars – an amount equivalent to 1,6 billion reais at the current exchange rate.
The debt comes from contracts signed between the two countries, which allowed Venezuela to acquire Brazilian products and services through credit. However, with the worsening of the political and economic crisis in Venezuela, payments began to be delayed, generating a considerable accumulation of interest and charges.
Impacts for Brazil: what could be done with this amount?
To get an idea of the impact, the government of São Paulo, in 2024, announced an investment of 316 million reais to build 80 daycare centers and 13 schools.
With the amount that Venezuela owes to Brazil, it would be possible to build more than two thousand of these educational institutions, spread across different regions of the country. This example illustrates the magnitude of the debt and the potential benefit that this money could bring to Brazil if it were used correctly.
The deterioration of bilateral relations
With the accumulation of debt, relations between Brazil and Venezuela, which were already shaken, deteriorated even further. In a recent statement, President Lula admitted that the political situation in Venezuela following the July 28, 2024 elections has worsened the relationship between the two countries.
Lack of payment and the growing amount of debt have been sources of tension in diplomatic discussions.
In July 2024, the Ministry of Finance revealed that the reconciliation process with Venezuela was still ongoing, but without concrete results.
As of July 31, Venezuela's total debt was $1.674.171.194,23, of which $1,257 billion was in arrears and $416,1 million corresponded to late payment interest. Furthermore, there was $17,8 million about to expire, which suggests that the problem is far from resolved.
Future perspectives: what to expect?
With debt constantly growing, questions arise about the future of relations between Brazil and Venezuela. The political situation in Venezuela, marked by instability and lack of consensus, makes any attempt to quickly resolve the debt even more difficult.
With each passing month, the amount owed increases, increasing uncertainty about when – or if – Brazil will see any return on this investment..
Venezuela's billion-dollar debt with Brazil is a clear example of how international relations can directly impact a country's economy.
If this situation continues without a solution, Brazil runs the risk of losing a significant amount of money that could be invested in essential areas, such as education and health..
Given this scenario, the question remains: how long will Brazil be able to sustain this debt without diplomatic and economic relations between the two countries deteriorating even further? And more importantly, will Brazil ever be able to recover this value that could transform the reality of thousands of Brazilians?
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