Venezuelan President Nicolas Maduro on Wednesday said that the South American OPEC member would avoid more borrowing on international markets because of rising costs as a result of worsening credit risk perceptions.
“We are not going to use or ask for credit, in those conditions the global capitalist banks want to impose,” Maduro said in a speech on state television. “We’re not going to do it. We have other [financing] sources, fortunately.”
Maduro, who said there was a “sort of financial, credit, international blockade” on the socialist-run nation, repeated earlier statements that Venezuela was prepared for volatility on global energy markets.
Venezuela, which receives 96 percent of its foreign currency revenues from oil, has called for an emergency OPEC meeting to halt a slide in oil prices.
Maduro said he hoped prices “bounce back and return to where they really should be.”
The recent plunge in prices, which have hit a four-year low, is bad news for a government already running a deficit of 15 percent of GDP.
That might force Maduro to rethink cut-rate oil sales to the nations of Petrocaribe, the club of 18 Latin American and Caribbean allies which pay about half-price for Venezuelan oil.
Some analysts estimate the price tag for Petrocaribe is up to US$10 billion a year for Maduro — and that is rising as crude rates fall.
“This is a situation in which energy agreements may have to be changed, so the decline in revenue is smaller, and it may be time for a more aggressive currency rate adjustment,” said economist Asdrubal Oliveros, who heads the consultancy Ecoanalitica.
Last week, the price of oil slipped to US$77.65 a barrel, the lowest since November 2010.
It was the sixth consecutive week of falling prices.
Venezuela’s economy is distorted by a rigid exchange rate system that pumps up the bolivar’s official value, and government subsidies that keep gasoline cheaper than water — but which are offset by runaway inflation and chronic shortages of basic goods.
According to Oliveros, oil would have to be at US$135 a barrel for the government to continue on its current spending path — an unlikely scenario.
The nation’s push to hold an emergency meeting has so far appeared to fall on deaf ears. However, Maduro said that Venezuela was mulling a response to falling oil prices with allied nations.
“There will soon be surprises with friendly OPEC countries,” he said, adding Venezuela’s alliances with Russia, China and some other members were growing stronger.
The nation’s bond yields are currently the highest of any emerging market economy.
Its debt on average pays 17.6 percentage points more than comparable US Treasury bills, according to the JPMorgan Emerging Market Index.
Bonds have dropped 12.8 percent so far this year, driven by investors’ concerns about its capacity to pay.
The overall index of emerging market bonds has risen 9.3 percent during the same period.
Additional reporting by AFP
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure