Latin America
Related: About this forumVenezuelan Default Suggested by Harvard Economist
As Venezuela racks up billions of dollars of arrears with importers that are fueling the worst shortages on record, one of the nations top economists is questioning the governments decision to keep servicing its foreign bonds.
A massive default on the countrys import chain is part of what has allowed the nation to keep paying its foreign bonds, Ricardo Hausmann, a former Venezuelan planning minister who is now director of the Center for International Development at Harvard University in Cambridge, Massachusetts, said by phone from Boston. I find the moral choice odd. Normally governments declare that they have an inability to pay way before this point.
While Hausmann declined to say if hes specifically recommending a default, he said he found no moral grounds for the government and state-owned oil company Petroleos de Venezuela SA to make $5.3 billion of bond payments due in October. With foreign reserves at an 11-year low and arrears to importers growing, Venezuelans are struggling to find everything from basic medicines to toilet paper. And prices are surging on the goods that they can buy, saddling the country with the worlds highest inflation rate.
The nations bonds are sinking as President Nicolas Maduro fails to stem the crisis. The extra yield investors demand to own Venezuelan sovereign bonds instead of U.S. Treasuries has jumped 1.92 percentage point in the past month to 12.3 percentage points, the highest since March, according to data compiled by JPMorgan Chase & Co. The spread is the highest in emerging markets. Bonds slumped last week after Maduro removed Rafael Ramirez, the countrys main economic policy maker, fueling concern the government may delay or scrap measures to ease the hemorrhaging of dollars, including a currency devaluation and increase in gasoline prices.
http://www.bloomberg.com/news/2014-09-07/venezuelan-default-suggested-by-harvard-economist.html
MADem
(135,425 posts)COLGATE4
(14,732 posts)Flatulo
(5,005 posts)Just in case...
Marksman_91
(2,035 posts)They're paying them millions to intentionally sabotage the country's economy, even though the government controls most institutions and means of production.
Again, just in case