WHENEVER someone questions Venezuela’s creditworthiness, the country’s president, Nicolás Maduro, retorts that his government has never missed a debt payment and never will. His predecessor and mentor, the late Hugo Chávez, said the same thing. Creditors are demanding a handsome reward for their trust in that promise. The yield on Venezeula’s dollar bond that matures in 2020 is 37%.

Bondholders’ faith will soon be tested. On February 26th Venezuela is due to pay $2.3 billion, mainly to hedge funds and investors that specialise in emerging-market debt. There is little doubt that it will make the payment. After that, the risk of a default on Venezuela’s remaining $64 billion of foreign-currency denominated bonds will rise sharply. In the second half of 2016 the government of Venezuela and PDVSA, the state-owned oil company, are due to pay $6 billion to creditors (see chart). With Venezuela’s heavy oil, virtually its only export, selling for as little as $25 a barrel, the country’s main source of foreign currency is drying up. “It now is a question of when they default, not if,” says Russ Dallen of Latinvest, an investment bank.

At the recent low price for its oil, Venezuela would earn $22 billion from exports this year, a drop of 77% from 2012. The government has so far responded by restricting imports to half of what they were that year. That, combined with price controls and a bizarre system of multiple exchange rates, has led to shortages of such necessities as rice and toilet paper. It is hard to see how imports could be further squeezed without provoking a social explosion.

Even with imports at rock-bottom levels, Venezuela is expected to have a financing gap of more than $30 billion this year. Its $52 billion-worth of sellable assets are shrinking fast. A hefty chunk of its reserves is in the form of gold held in the vaults of the central bank, a cumbersome means of payment. Chávez, in a nationalistic gesture, brought 160 tonnes to Venezuela from storage abroad. Now at least 27 tonnes are thought to have been shipped back to service debt.

About half of Venezuela’s foreign debt is explicitly owed by the sovereign; the rest is owed by PDVSA. There are important differences. Most of the sovereign-debt contracts have collective-action clauses (CACs), under which a restructuring, if accepted by holders of an agreed proportion of debt, can be imposed on all of them.

PDVSA, Venezuela’s main source of foreign exchange, would have a harder time restructuring its debt. Its bond contracts do not have CACs; if all bondholders are not satisfied by a restructuring offer, a few could hold PDVSA to ransom. But a default would be messy. Unlike Venezuela itself, the oil monopoly owns big assets outside the country, including Citgo, an oil company in the United States. The risk that creditors might seize these is one of the main reasons that Venezuela is so eager to avoid a default. PDVSA may seek to delay payments due later this year, but that will require the agreement of all creditors.