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S&P Warns Venezuela Likely to Default on Debt within Six Months

By: Sabrina Martín - @SabrinaMartinR - Jul 13, 2017, 10:40 am
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Venezuela’s rating changed from CCC to CCC-, after the aggravation of the political and financial crisis that faces the South American country. (Hot FM)

EspañolThe financial agency Standard & Poor’s has downgraded Venezuela’s debt rating, warning that it is at risk of defaulting within the next six months.

The country’s rating changed from CCC to CCC- following a worsening political and financial crisis. The agency explained that the lowered score is due to the deterioration of the economy and government’s assets and an increased political tension caused by reckless and malicious leadership under President Nicolás Maduro.

Standard & Poor’s officials said they are certain Venezuela will default unless they significantly and unexpectedly improve those conditions. They said they also fear that the country’s economy, which has relied for years on low oil prices, can’t be financed on the international market, making the country incapable of paying its debts.

S&P also said that without new and consistent foreign financing, the government will have difficulty repaying the country’s debt. Currently, officials predict an increase of  US $2.8 billion in the second half of 2017, and about $7 billion in 2018.

The rating agency forecasted a six-percent decrease in Gross Domestic Product (GDP) this year.

S&P warned that the weakening of institutions and the growing discontent among the population could further reduce Venezuela’s ability to cope with urgent economic and social problems.

In January 2017, the rating agency Fitch Ratings also warned that state oil company PDVSA would be on the brink of defaulting as well.

Source: El Estímulo

Sabrina Martín Sabrina Martín

Sabrina Martín is a Venezuelan journalist, commentator, and editor based in Valencia with experience in corporate communication. Follow @SabrinaMartinR.