Venezuela's Economic Recovery

Paper Summary:

This paper discusses that, after a two-month long oil strike, Venezuelan President Hugo Chavez is assuring voters and foreign investors that the Venezuelan economy is on track to rebound but economic; but, geopolitical indicators point to a prolonged aftershock for Venezuela and the region. The author points out that the country's overdependence on oil has overexposed the economy to the high volatility in oil prices and the resultant "booms and busts" of the oil industry cycle. The paper reveals another problem: Chavez' s handling of the strike risks tarnishing Venezuela's reputation as one of the regions more stable democracies.

From the Paper:

"Venezuela is also in the midst of a difficult restructuring of its foreign debt, which totals $23 billion, leaving it less flexibility in the use of its reserves. President Chavez stated at the end of March that the country would be able meet its $2 billion in foreign debt obligations in 2003 and stave off any defaults. An important component of the foreign debt refinancing is the country's intention to issue a voluntary bond swap. A credit default would jeopardize the security exchange and could trigger further defaults."

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