Panelists discussed how oil prices affect regional growth projections, Petrocaribe, and Mexican energy reform. ... Play Video
Vladimir Werning, Executive Director and Head of Latin America Research, J.P. Morgan
Adrienne Cheasty, Deputy Director, Western Hemisphere Department, International Monetary Fund
Leandro Alves, Principal, Falvez Energy
Falling oil prices show a mixed impact on Latin America and the Caribbean, with exporters such as Venezuela and Colombia taking a hit and countries in Central America benefiting. On February 19, AS/COA hosted a discussion with experts from the private and public sector about the price of oil's impact on the region.
"I don't give the system, as we know it, more than six months," said Francisco Rodíguez, highlighting Venezuela's dollar exchange rate and relative prices as some major issues for the country's economy. While Venezuela's economic situation affects investors' confidence in the country, the political scenario has implications for foreign interests as well, said panelists. According to Alejandro Velasco, President Nicolás Maduro's 20 percent approval rating does not transfer to support for the opposition, and Venezeula is still not on the verge of political change unless protests by the popular sector take place. Even if the opposition were to take over, Jaime Reusche said there would still be some loss to bond holders.
The current situation cannot continue. The news of oil sinking to around $60 dollars per barrel, combined with Venezuela’s large fiscal deficit and deteriorating economy, makes the country’s annual $8 billion oil subsidy to PetroCaribe nations increasingly unsustainable.