Venezuelans weary of exit plan for country's crisis| MENAFN.COM

Thursday, 06 October 2022 10:08 GMT

Venezuelans weary of exit plan for country's crisis

(MENAFN- Khaleej Times) With his country spiraling into a desperate financial crisis, Venezuela's president has proposed restructuring its massive debt, leaving international investors wondering on Friday whether they'll be paid and some residents expressing doubt the socialist leader can improve their lives.

President Nicolas Maduro announced on Thursday that the state-run oil company will make good on a $1.1 billion payment, then begin "refinancing and a restructuring" its debts. The country owes global creditors an estimated $120 billion, about half in the form of dollar-denominated bonds.

Buying meat at a Caracas butcher shop, homemaker Ana Gonzalez, 41, said she has to scrape by to put food on the table for her family. She has no faith that Maduro's government can rescue the country from its worst economic crisis ever.

"What he says is a lie... With this government, nothing will change," she said, standing at the counter. "It's not possible to live like this."

The oil-rich country racked up massive debt when global prices of oil soared during the late President Hugo Chavez's rule. But a dramatic drop in the price of crude has ravaged the country that sits atop the world's largest oil reserves.

Making matters worse, in August the Trump administration - a harsh critic of Maduro's policies - levied financial sanctions that bar US investors from lending to Venezuela. It also blocks US investors from negotiating with a list of the country's top officials, including Vice President Tareck El Aissami, blacklisted by the US as a major drug trafficker. Maduro put him at the helm of the country's negotiations with creditors.

El Aissami, in a national broadcast Friday, invited investors to the first round of negotiations November 13 in Caracas. He said that Venezuela will continue to fulfill its commitments despite the "imperialist sanctions."

Bond prices took a hit on Friday with markets jittery throughout the day, but recovering somewhat as investors took comfort that Venezuela had not defaulted.

"Even the market was confused about how to price things in the wake of Maduro's confusing remarks," Dallen said.

It remains unclear, however, whether Venezuela can maneuver around the sanctions in a restructuring bid.

"President Maduro has surprised the world with yet another inexplicable solution to a dire economic situation," said Andrea Saldarriaga Jimenez, of the Atlantic Council, a US think tank.

"Time will tell if Russia or China are willing and able to jump in, and if US companies, like Goldman Sachs, will work around US sanctions to step in again."

Venezuela for years has made good on its debt payments, drawing down scarce reserves at the cost of foregoing imports of food and medicine, leading to shortages. Triple-digit inflation sparked a scarcity of cash making it difficult for residents to buy daily goods.

Stalin Gonzalez, an opposition lawmaker in Venezuela's national assembly, said the congress will not recognise any financial restructuring without first holding a debate among lawmakers.

"This is a matter of national interest," Gonzalez said. "The country needs to discuss, to know what is going to be done with the debt."

The International Monetary Fund said Friday it would give Venezuela six months to provide timely statistics about the nation's economy. If it doesn't comply, member nations could vote to expel the country from the multilateral lender.


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