Join the conversation:

Venezuela says its prepared for the volatility of the oil market

Venezuela says its prepared for the volatility of the oil market

Posted by Dubraswka Aguilar on October 22, 2014

The tumble in crude oil prices on international markets to around $85 a barrel comes at a bad time for cash-squeezed Venezuela as it faces a heavy debt repayment schedule and an economy believed to be in recession.

Venezuela depends on oil for 96 percent of its hard currency revenues, so market fears have grown over its ability to service its major debt payments, though President Nicolas Maduro's government has time and again ruled out a default.

Presenting the 2015 budget bill to the National Assembly, Marco reiterated Venezuela would have no problem paying the upcoming bond and all future debt.

"Venezuela maintains and will maintain an impeccable record in paying its sovereign debt. The government has the seriousness, will and financial capacity to honor its commitments," he said to applause in the National Assembly where the ruling Socialist Party has a majority.

"We will fulfill the payment of the 2014 PDVSA bond for $3 billion due on Oct. 28," Marco added. Despite market jitters, most Wall Street analysts say there is little sign the government may default.

"We still think the government will prioritize external debt service, and a muddle through is possible, but scenarios for political and social stability seem highly unpredictable," said a J.P. Morgan analysis.

The price of Venezuela's oil basket, which trades at a discount to other benchmarks because of its higher content of heavy oil, was currently $76.63, Marco said.

J.P. Morgan analyst Ben Ramsey estimated Venezuela would lose between $8-10 billion next year if the country's barrel averaged around $80.

Link To Full Article: 

Facebook comments



Monthly newsletter featuring articles hand picked by our country managers from the best content across PanamericanWorld.



Monthly newsletter featuring articles hand picked by our country managers from the best content across the Caribbean Region on PanamericanWorld.

PANAMERICANWORLD COUNTRIES