Tags: Maduro | Venezuela | economy | default

Maduro Says Venezuela Can Pay Debt, Blasts Default Fears

Thursday, 11 Sep 2014 10:30 AM

President Nicolas Maduro said Venezuela could meet all its obligations to bondholders, as he sought to quell market fears that the Socialist-run country may opt to default when $5 billion of its foreign debt falls due for repayment next month.

Fears of a possible default heightened, with bond yields spiking, after the publication of an article by a former planning minister and a pro-opposition economist that suggested an orderly default could ultimately help Venezuela's slumping economy.

"We're prepared to meet our international obligations in their entirety," Maduro declared on Wednesday night. "Down to the last dollar."

Speaking at an event attended by industrialists, Maduro blasted what he deemed an international campaign to sully Venezuela. Like his predecessor, the late Hugo Chavez, Maduro often accuses the United States or financial speculators of trying to ruin Venezuela's self-styled socialist experiment.

Investors have been alarmed by the apparent hesitancy of Maduro's government to make reforms needed to rehabilitate an economy that saw annual inflation hit a fresh six-year high of over 63 percent in August.

Venezuela is struggling with dwindling foreign reserves, as well as spiraling inflation and shortages of goods ranging from medicines to milk due to strict currency controls.

In an article published in Project Syndicate, a web portal that carries opinion pieces on global affairs, Harvard Professor Ricardo Hausmann, a former planning minister, and Miguel Angel Santos, a Harvard researcher argued that the economic crisis was tantamount to Maduro's government "defaulting" on its people.

"The fact that his administration has chosen to default on 30 million Venezuelans, rather than on Wall Street, is not a sign of its moral rectitude," the article said. "It is a signal of its moral bankruptcy."

Though titled "Should Venezuela Default?" the article said such a dramatic move was improbable. Many private analysts agreed.

"The government cannot risk being shut out of international financial markets, and the economic team seems to be aware of this," said analyst Nicholas Watson of Teneo Intelligence.

© 2017 Thomson/Reuters. All rights reserved.

 
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Economy
President Nicolas Maduro said Venezuela could meet all its obligations to bondholders, as he sought to quell market fears that the Socialist-run country may opt to default when $5 billion of its foreign debt falls due for repayment next month.
Maduro, Venezuela, economy, default
327
2014-30-11
Thursday, 11 Sep 2014 10:30 AM
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