Venezuela’s economic crisis is deepening – credit-rating agency Standard and Poor’s declared the country in default after it missed a $200 million payment. But the country’s leaders said they’re working on a fix.
CGTN’s Stephen Gibbs reports.
It has been the moment long predicted, and now it has arrived—almost.
Venezuela, once the most prosperous country in Latin America, can no longer pay its debts. But this is not a full default, yet.
The government emphasized that when it called in all its creditors to explain the situation. Venezuela said still intends to pay its debts. The meeting was chaired by Vice President Tareck El Aissami—who faces U.S. sanctions for alleged drug trafficking.
The U.S. has also banned U.S. companies from trading in new Venezuelan debt, so no surprises as to whom Mr. El Aissami blames.
“This assault on behalf of the U.S. government, along with factors of the Venezuelan opposition, finished off with the few ways that still allowed Venezuela to widely develop within the international financial market,” he said.
“Today, Venezuela is limited in seeking finance from what has historically been our market. We are finding ourselves with the need to propose new formulas to overcome this complexity.”
Cut off from U.S.-sourced financing, Venezuela is expected to become more reliant on both Russia and China for its immediate financial needs. A restructuring of its billions of dollars of Russian debt is likely to be announced on Wednesday.
The question now is what the cost will be for President Maduro. A full default is likely to worsen the already chronic recession this country is experiencing.
Caracas-based political analyst Luis Vicente Leon – a critic of the government – believes that any cut in funding for the Maduro government risks backfiring.
“We don’t produce anything,” he explained. “We depend on dollars. And what you are cutting is not the dollars for the government. It is the dollars for me and for the people inside.”
His argument is that, as Venezuelans get even poorer, they become more dependent on the government. So political change is less likely.