Puebla, Mexico, November 4, 2016 (venezuelanalysis.com) – Venezuelan President Nicolas Maduro accused international financial institutions of unfairly persecuting his country.
The president argued his government has consistently honoured its debt obligations in recent years, and dismissed speculation his administration faces the risk of default.
“This is the only country in the world that pays out more than US$60 million dollars (in debt obligations), which is a very high percent (of our GDP),” he told state broadcaster VTV.
Maduro added, “We have absolute solvency (in terms of) finance, politics, institutions, morals – the criminal (international financial) raters are increasing the risk (assessments) as a way to attack us.”
He continued by arguing this attack has persisted for three years, with ratings agencies using negative credit outlooks to lay the groundwork for the destabilization of his socialist government.
Throughout Maduro’s first year in office, 2013, Venezuela saw its credit rating downgraded by ratings agencies Moody’s and S&P, with Fitch following suit in March 2014. In January 2015, Moody’s revised its outlook, and put its outlook at stable. A newer report from the same agency in March 2016 returned its outlook to negative.
Meanwhile, the International Monetary Fund (IMF) predicted last month Venezuela would see GDP contract by 10 percent this year. It made the same prediction in 2015. The fund has since conceded 2015 GDP contraction was nearly half that figure, at 5.7 percent.
Over the past two years Venezuela has seen a wave of scarcity of consumer goods, and surging inflation. Last week the country’s currency, the BsF, lost around a third of its value in a matter of days. The spike in inflation came on the heels of news Maduro would increase the minimum wage by 40 percent.
At the time, leading Venezuela expert Greg Wilpert said the collapse in the BsF’s value was likely due to a mix of political and economic factors.
“It’s hard to say how much is political and how much is economic, but if I had to guess, I would say it’s about 50-50,” he said.