Unversed in debt details, Venezuelans desperate for any relief

CARACAS - 4 November 2017: Venezuelans heaving under an unprecedented economic meltdown know little about the finer points of foreign debt negotiations, but long for anything that would put more food on their plate and slow the world’s highest inflation.

Few on the streets of capital Caracas really understood unpopular leftist President Nicolas Maduro’s announcement this week that he would seek to refinance the oil-rich nation’s heavy bond burden of $60 billion - or about $2,000 per person.

But those interviewed by Reuters said they were hoping any deals between the government and its multiple foreign creditors would free up foreign currency to increase imports of scarce food, medicine, and basic products.

“Maybe it will work, and improve the country,” said Johny Vargas, 53, a construction worker who says he often only eats twice a day because his salary is gobbled up by price increases.

“Everything is so expensive. There’s no food, nothing. Maduro’s useless. Look at the bad state we’re in.”

Up to now, Venezuela’s ruling Socialist Party has prioritized debt payments by slashing imports, compounding four years of recession and shortages on the shelves.

Should a debt renegotiation be reached, it could free more money in the short-term for the government to bring in basic foods and medicines.

But Wall Street is skeptical, and so are many Venezuelans.

“We can’t have strong negotiations. We don’t have the credibility to sit down and make requests,” said 35 year-old accountant Mayerling Delgado, referring to Venezuela’s increasingly fraught relations with many other countries.

“So we have to pay,” she added in a resigned tone, in a busy Caracas plaza.

Experts have long warned that debt accrued under late leader Hugo Chavez was unsustainable, and urged Maduro’s government to refinance its debt load.

But pursuing such an operation now is near impossible given Venezuela’s economic mess, a dearth of technocrats in the government, and, especially, sanctions that bar U.S. banks from participating in or negotiating new Venezuelan debt deals.

NOT PAYING IS WORSE?

Most Venezuelans balk at the idea of a default, which would trigger lawsuits by creditors seeking to seize assets such as refineries in the United States. That could plunge the OPEC nation of 30 million people into even worse hardship.

“The majority of the population has consistently perceived a default as a negative move that could hurt the country’s economy,” said economist Luis Vicente Leon of pollster Datanalisis.

But with many analysts viewing a default as ultimately unavoidable given the parlous state of Venezuela’s coffers, some said it might be better to bite the bullet.

“What’s the science behind paying when you’ve already lost? It’s not what we as Venezuelans want ... but there’s no other way out, unfortunately,” said beautician Harlee Tovitto, 42. She plans to emigrate to neighboring Colombia soon because she can no longer afford clothes or insurance for her three children.

Amid a deepening spat with U.S. President Donald Trump’s administration, some Venezuelans think Caracas would find a way out of its bond mess if it weren’t for the U.S. sanctions.

“If Venezuela has always paid its debt ... why can’t they refinance?,” said Rafael Moreno, 30, a lawyer and former Chavez supporter who now says he does not back either the government or opposition.