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| Weekly Report |
| The devaluation won’t be as bad as Venezuelans think |
For some time now, at Ecoanalítica, we have been saying that it was very likely that the Administration would devalue the currency during the first two month of 2010. And last Friday, January 8, after five years of having the official exchange rate fixed at VEF2.15/US$, President Chávez announced the devaluation of the currency.
In the wake of said decision, uncertainty is the word that best describes the state of the country and the economic agents. This is due to the vagueness and lack of information which accompanied the announcement of the devaluation. In this Report, we will clarify some of the questions that are being asked concerning the implications of the recently announced devaluation.
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| Monthly Report |
VENEZUELA: I CAN AND WANT TO PAY, BUT NO ONE UNDERSTANDS ME
Given the significant increase in total public debt throughout this year (domestic and foreign, including PDVSA) and the fact that this increase will continue in 2010, a recurring question in some sectors of the financial markets (local and international) has to do not only with the willingness to pay of the Venezuelan government, but even its capacity to honor its obligations (government bonds and PDVSA). This is compounded by the recent events in the banking system, which some have termed a new banking crisis.
In view of this fact, Ecoanalítica considers it necessary to analyze this issue and see whether these concerns hold water or not. In this report we will try to put into context the present Venezuelan situation, in light of these arguments and considering what the economic literature says about the issue of sovereign debt default.
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