Guest post: why Venezuela should not default
By Francisco Rodríguez of Bank of America Merrill Lynch
In a provocative article published last week by Project Syndicate (Should Venezuela Default?), Venezuelan economists Ricardo Hausmann and Miguel Angel Santos make an interesting argument. They contend that Venezuela cannot meet all of its foreign currency obligations and is already defaulting on some of them. If authorities adopted a set of common-sense policies, they argue, these would include defaulting on the country’s foreign debt and making bondholders bear part of the burden of adjustment.
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Francisco Rodriguez is chief Andean economist at Bank of America Merrill Lynch. This post is published by permission. Copyright © 2014 Merrill Lynch, Pierce, Fenner & Smith Incorporated.
questo post è un po' vecchiotto da una breve ricerca in rete ho trovato che è del settembre 2014 ...comunque mi sembra ancora valido per l attuale scenario
lo stesso Rodríguez ne ha fatto un altro più recente:
BofA: Venezuela has the capacity to honor commitments
Francisco Rodríguez, Director of Bank of America-Merryl Lynch, noted that Venezuela's debt is not that large and that the country has repayment capacity
BETSSY SANTISTEVAN GASTELÚ | EL UNIVERSAL
Friday October 16, 2015 10:55 AM
"Venezuela should not default on its foreign debt because it has the capacity to continue honoring its commitments," asserted Francisco Rodríguez, Director of Bank of America-Merryl Lynch.
He added that the costs of a default would be too high for the Venezuelan economy.
In that regard, Rodríguez explained, first, that Venezuela's foreign debt with entities overseas totals USD 117 billion, which represents 24% of the Gross Domestic Product (GDP). He added that if very conservative adjustments are made on the foreign exchange scheme, plus other estimates, the foreign debt could hit 42% of the GDP. "It is not higher than other countries' debt."
Hence, the economist concluded that Venezuela's debt is not that high. Venezuela's debt is not beyond repayment and the country has repayment capacity.
Moreover, a default, he explained, would have extremely high costs for Venezuela, a country with structural characteristics different from those found in other countries.
Venezuela is an oil exporting country and holds 13 refineries overseas. If Venezuela defaults, bond holders would try to confiscate those refineries. Therefore, US-based refinery Citgo and other refineries in Europe would be seized. Moreover, bond holders could try to seize oil revenue and freeze credits required by state-run oil holding Petróleos de Venezuela (Pdvsa) to boost oil production, Rodríguez explained.
