Tomorrow, Venezuela’s newly created debt restructuring committee is scheduled to meet with creditors in hopes of renegotiating, or restructuring $69 Billion of Venezuela’s outstanding debt. It is not presently clear just how many creditors will actually be attending the meeting. It is also unknown if the meeting will include frank discussions about restructuring Venezuela’s current debt, or if Venezuelan officials will use the opportunity to simply blame the current economic situation on US sanctions. Quite honestly, it is unclear at this time whether or not a meeting will even take place tomorrow.
As meeting preparations continue this evening rumors of default continue to swirl from Caracas to Wall Street. Venezuelan President Nicolas Maduro has adamantly insisted that his country will never default on its debt. Despite his assurances, speculation is growing that the true purpose of tomorrow’s meeting is to lay the foundation for default. Venezuela’s economic situation is beyond dire. It’s cash reserves are nearly dried up, and US sanctions are making it impossible for Venezuela to refinance its debt. Securing a debt restructure in the current climate is virtually impossible. Therefore, Maduro’s only other option would be to declare insolvency and default on the country’s $150 Billion in debt.
The uncertainty surrounding Venezuela’s economic future is causing anxiety internationally. A default could possibly spark a global financial crisis, although the prospects of this happening are low. There is still a possibility of Russia extending a lifeline and saving the day. Or, at least postponing the inevitable for some time. The two nations are expected to sign a debt restructuring deal later this week that will provide some relief for Maduro’s socialist paradise.
Realistically, however, even Russian assistance might not be enough. After years of political catastrophe, social unrest, and economic disasters, time is truly running out for Venezuela. What happens this week will likely determine its fate whether Maduro is prepared to face the truth or not.