With the headlines focused on the financial events taking place in Greece and China, not much attention has been given to the situation in Venezuela.

The last few years have seen many countries in South America undergoing some sort of economic recession while others hover on the verge of experiencing one. South American economies are in general heavily dependent on exports of their commodities, especially oil and gold and these markets have been plummeting all over the world. In addition, the U.S. dollar has been zooming up, putting a further strain on the South American currencies.

When things were going well in South America and when oil exports were booming, business and governments took out tremendous loans and today they are finding themselves unable to repay most of them. With the primary portion of the debt denominated in U.S. dollars, borrowers in these countries are now finding that the cost of repayment is way beyond their original possibilities.

Each country is handling its situation differently, but it is Venezuela that seems to be closest to a full blown financial crisis. The country has been struggling with its economy for some time now and the drop in oil prices has dealt it a severe blow. Up until now, the country had depended on oil revenues for more than 95% of its foreign income but its reserves have dwindled to $20 billion.

According to economist Jason Mitchell, “Venezuela has one of the worst managed economies on the planet and its bonds are trading at levels that suggest a default is priced in.” Bondholders are increasingly worried that the country will fail to service its debt.

The inflation rate in Venezuela today is a shocking 68.5 percent and shortages of basic products and services have already starting to be felt.

No International Calls

One of the areas hardest hit at the moment is their telephone service. Telephone carriers have been defaulting on their payments to their international partners and are already tens of millions of dollars in arrears.