Venezuela Needs Cash, but There's No Easy Way to Get it
Venezuela Needs Cash, but There's No Easy Way to Get it
COA’s Eric Farnsworth explains how sharp declines in oil prices will further affect Venezuela’s economy.
Days after OPEC decided not to give into Venezuela's pleas to cut oil production, President Nicolas Maduro has begun talking up several moves to raise money, including plans to slash 20 percent of "unproductive" spending and an attempt at "perfecting" the country's foreign exchange system.
"Clearly the government is trying to send signs to the market that they are working on necessary adjustments that the economy needs in order to honor international commitments and keep up with social policies, which are essential for political stability," said Diego Moya-Ocampos, a senior political risk analyst at IHS. "However, these policy adjustments are not enough. This reflects simply that the government is desperately looking for funds to compensate for the lost revenues from declining oil prices...."
But political instability could prompt China to cut back on what has been a critical source of revenue, analysts say.
"If that lifeline is cut, Venezuela doesn't have a whole lot of options," said Eric Farnsworth, vice president at Council of the Americas and Americas Society....
