MercoPress. South Atlantic News Agency

Latam is suspending flights to Venezuela because of the government's mounting debts

In a statement, Latam airlines said it would suspend its operations to Caracas airport “temporarily and for an unspecified time”.

The largest airline in Latin America, Latam, (Lan Chile and Braizl's TAM) announced it is suspending its flights to Venezuela because of the worsening economic situation. The suspension came a day after Germany's Lufthansa said it would suspend its services to the country.

 The German company said Venezuela owed it millions in ticket revenues. Alitalia and Air Canada have adopted similar suspensions, since it is estimated the Venezuelan government owes airlines almost 3.6 billion dollars.

Oil-rich Venezuela has been hit hard by the global drop in oil prices and suffers from high inflation and a chronic shortage of basic goods.

Several airline companies have said that currency controls in Venezuela made it impossible for airlines to convert their earnings into dollars and send the money abroad.

In a statement, Latam airlines said it would suspend its operations to Caracas airport “temporarily and for an unspecified time”.

It said flights on its Sao Paulo to Caracas route would end first, within days, and the other routes it runs to Caracas from Lima and Santiago would be halted by the end of July.

Strict currency controls were first imposed in Venezuela in 2003 by late President Hugo Chavez.

The restrictions were further tightened two years ago, forcing several airlines to reduce their operations in the country as they struggled to repatriate billions of dollars in revenue held in the local currency - the Bolivar.

Some airlines are now requiring passengers to pay their fares in dollars. While the official rate ranges between 10 and 30 Bolivar to the US dollar, in the black market it is traded at 1.000 Bolivar.

Venezuela's government says it is using its foreign reserves - which are now scarce - to pay for essential items such as medicines and industrial machinery.

Recently Coca-Cola said it would be halting production of some of its soft drinks because of a lack of sugar while the tyre and rubber products company Bridgestone also ended its more than 60-year relationship with the country.