Maduro Picks Bondholders over Starving Venezuelans as Shortage Crisis Continues

4
hambre - venezuela - deuda
While Maduro is looking for ways to satisfy bondholders, Venezuelans are running out of ways to obtain food and medicine. The regime has chosen to reduce imports of those goods to pay off foreign debt. (Flickr)

Espa√ĪolOnce again, Nicol√°s Maduro’s regime in Venezuela is walking a tightrope with the country’s finances, as the payment date for US $3.8 billion in¬†external debt nears.

November¬†will be a¬†moment of truth for the country as it tries to avoid defaulting. It’s already late¬†in paying off¬†a total of US $321 million¬†spread across¬†five Venezuelan bonds.¬†Those payments were due October¬†12 and 13, have still not been settled but are within the “grace period” for payment.

Subscribe to our daily newsletter

The regime¬†is expected to pay another¬†$80 million for coupons during¬†the first¬†10 days of December. Meanwhile, the country’s gold reserve¬†will have to pay another US $29.5 million.

While Maduro is looking for ways to satisfy bondholders, Venezuelans continue to run out of food and medicine. The regime has chosen to reduce imports of those goods to pay off foreign debt.

Bent Lystbaek, who oversees US $3.4 billion in emerging market debt at Danske Capital, told Bloomberg that Maduro will delay the default as long as possible, meaning that he might not mind reducing imports even further despite the nightmare effect it will have on hungry citizens.

President of the National Assembly Julio Borges said that payment of the debt “means less importation of food, medicines and other goods.” Production of basic products every day¬†grows smaller,¬†as¬†companies aren’t¬†receiving enough¬†money to manufacture the¬†products¬†necessary to cover national demand.

Carlos Larrazabal, President of Fedec√°maras,¬†said¬†the government has not auctioned foreign currency out of¬†Venzuela’s Central Bank for over half a month. “There is a legal exchange rate for imported products, and the illegal method ‚ÄĒ the black dollar or parallel dollar ‚ÄĒ is in the stratosphere, growing and impacting the economy,” Larrazabal said.

 

Last July 12, Standard & Poor’s downgraded Venezuela’s debt rating and warned the country was at risk of defaulting. Agency officials said they fear that the country, which has been affected for years by low oil prices and poor resource management, can’t be financed in the international markets and, consequently, will be unable to pay its debt.

Oil production has dropped by 750,000 barrels in one year, amounting to a loss of US $15 billion. That fall in oil production has left the country’s four refineries processing only 15 percent of¬†the country’s demand.


Here is my opinion on the payment of $3.525 million on foreign debts that are due in October and November. 

Sources: El Nacional, El Estímulo.

Subscribe to our daily newsletter
Sign up here to get the latest news, updates and special reports delivered directly to your inbox.
You can unsubscribe at any time