Venezuela: S&P declares country in default November 13 /update 1

Event

The credit-rating agency Standard & Poor’s declared the Venezuelan government to be in partial default on its foreign debt late on Monday, November 13. The decision came after the government failed to pay two consecutive interest payments and following a meeting earlier in the day with government officials in Caracas, during which the government did not propose a debt restructuring plan. Other credit-rating agencies could follow suit. The state-owned oil company PDVSA is also at risk of default.

In the short- to medium-term, the default will likely further discourage foreign firms and governments from doing business in Venezuela, exacerbating existing shortages of essential goods. In the medium- to long-term the financial crisis could increase poverty rates and reduce public investment in the economy, thereby increasing the risk of widespread social unrest and political violence.

Context

Venezuela was shaken by four months of violent anti-government protests earlier in the year, fueled by ongoing political, economic, social, and health crises. While the rate and intensity of protests has fallen significantly in recent months, the underlying problems remain and the potential for further large-scale protests and associated violence cannot be overstated. Over 160 people were killed in the protests, with the majority of fatalities attributed to excessive force on the part of security authorities.

Advice

Individuals in Venezuela are advised to closely monitor the sociopolitical situation and to systematically avoid all protests due to the risk of violence. Maintain a stockpile of enough food, water, and other supplies enabling you to shelter in place for several days in the event of a sudden deterioration of the local security situation.