Venezuela’s “increasingly fragile” balance sheet and a Hugo Chávez reelection could push the country into default in 2013, Wall Street analysts predicted.
Chávez has nationalized sectors of the economy and created a convoluted system of price and currency controls which contribute to an “unsustainable” mix, according to Morgan Stanley analyst Daniel Volberg, whose note last week warned that the country could default in 2013. If oil prices tank while inflation and Chávez’s lack of fiscal discipline continue, the country does not seem likely to pay back its $110.6 billion debt.
Venezuela has been on analysts’ radar for years seemingly vying for the dubious honor of most likely to default on its payments. If fiscal practices continue the way they are, coffers don’t seem full enough to repay the $4.3 billion that is due between August and November 2013 and the Latin American country may have to default.
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