Venezuela is tapping its massive oil reserves in order to pay India back for the pharmaceuticals it gave the socialist South American country, according to Reuters.
The Venezuelan government does not have the cash on hand to fund its publicly-run hospitals or import drugs because of hyperinflation and low global oil prices. Venezuela is currently short on medicine, food and electricity, despite having the world’s largest proven crude oil reserves.
India is a global leader of generic pharmaceutical production, and some of the country’s biggest firms are tied up in bad deals with Venezuela.
Major Indian pharmaceutical company, Dr. Reddy’s Laboratories Ltd., had to write off “$65 million in the March quarter, which it said was almost all the money it was owed from Venezuela,” according to Reuters. Another Indian firm, Glenmark Pharmaceuticals, is owed $45 million by the socialist country.
“At this point, even if our companies get 5 to 10 percent of the payment they are owed, they would be satisfied,” one anonymous official told Reuters stated.
Indian officials said Venezuela seems on board “in principle” with the deals, but nothing was set in stone. Banking giant, State Bank of India, would manage the potential deal between the two governments.
This is not the first time Venezuela leveraged its oil wealth to get out of tight economic jams. The country made a deal with Cuba in 2007 to get Cuban doctors to work in the poor parts of Venezuela in exchange for 100,000 barrels of Venezuelan oil per day, according to BBC News. Another part of the deal allowed Venezuelan medical students to study in the communist island dictatorship.
Venezuelan hospitals have ordered less drugs for patients because of the country’s slow-burning economic disaster. Indian exports to the socialist country from April 2015 to February 2016 plummeted close to 50 percent, much of it related to the pharma industry.
Nicholas Casey of The New York Times wrote an article published Sunday taking a close look at the socialist country’s dysfunctional hospitals. “By morning, three newborns were already dead.” Dr. Osleidy Camejo, interviewed by Casey, grimly states, “the death of a baby is our daily bread.”
Indian government representatives are hoping to settle the matter of the pharmaceutical debts in a few months. The Venezuelan Health Ministry did not respond to Reuters’ request for comment.
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