Why Critics Call Venezuela's Debt ‘Hunger Bonds’: QuickTake Q&A

With Venezuela relying on oil revenue for 95 percent of its foreign-currency earnings, and crude prices depressed, President Nicolas Maduro faced a choice: maintain steady imports of food or continue making payments on overseas notes. He chose the latter. His critics say he’s prioritizing his political survival over his constituents’ needs and have dubbed government debt under his rule “hunger bonds.” Opponents struggled to bring attention to the movement until May, when Goldman Sachs Group Inc. made a big purchase that provided the regime with desperately needed dollars. Critics pounced on what they saw as a soulless investment bank throwing a lifeline to a despot. “Hunger bonds” became one of the themes of a demonstration outside Goldman’s New York headquarters, and the phrase showed up in tweets and memes featuring images of malnourished Venezuelans scavenging for food. The opposition-controlled National Assembly vowed to investigate the deal.

There’s certainly an argument to be made. With a severely constrained supply of cash, Maduro has kept up bond payments while sharply curtailing imports of food, medicine and other basic goods. A study showed that the average Venezuelan adult lost 19 pounds last year due to food shortages. Avoiding default serves Maduro’s political interests by preserving the status quo. At the same time, some analysts argue that a messy debt default could have far-reaching consequences, including the seizure of Venezuelan assets around the globe that could make living conditions even worse at home.