Venezuela

An international arbitration tribunal has ordered Venezuela to pay a Vancouver-based mining company more than $1.2 billion ($1.5 billion Cdn.) for expropriating its gold mines. Venezuela took over Rusoro Mining’s investments in the country as part of a nationalization of the gold industry in 2011, the Toronto Star reported on a Canadian Press story. Rusoro Mining Ltd. said Tuesday the money is due immediately and it expects that Venezuela will comply with its international obligations.

Venezuela President Nicolás Maduro’s decision to reopen the border with Colombia grants his countrymen a lifeline of crossing into frontier towns to buy what they need. Five border crossings opened Saturday under a plan announced by the presidents of both countries to gradually normalize movement. Cars will be allowed to cross in a month. But for now, traffic is limited to pedestrians, meaning for many of 54,000 Venezuelans who crossed over, how much they take home depends not only on what they can afford, but also how much they can carry.

With Venezuela's economy veering into depression and Venezuelans scrambling to find basic goods, the government's decision to keep servicing the country’s $68bn in external bonds has been called everything from “crazy” to “a crime against humanity.” Putting bondholders above Venezuelans, these critics argue, is just morally wrong, Bloomberg News reported. But such charged rhetoric is no substitute for a sober analysis of Venezuela's debt predicament. Seen in that light, the wisdom of defaulting is less clear cut.

Venezuela’s bonds are soaring on speculation the government may be looking to strike a deal to push back looming debt maturities, a move that would give the cash-strapped nation desperately needed breathing room, Bloomberg News reported today. State-owned oil producer Petroleos de Venezuela SA has seen its $3 billion of bonds due in April jump 5.3 cents this week to 69 cents on the dollar, the highest September 2014.

The International Monetary Fund issued a report that consumer-price inflation in Venezuela is forecast to hit 480 percent this year and top 1,640 percent in 2017, the Wall Street Journal reported today. As Caracas extends its declared state of economic emergency, many economists say that the nation will soon have to ask the IMF for a bailout. It’s gotten so bad, the government this month handed over control of food stocks to the military, ceding even more power to the armed forces.

Venezuela is “highly unlikely” to have enough hard currency to fully make its debt payments this year, although a default isn’t inevitable, according to a report from Moody’s Investors Service, Bloomberg News reported. State-owned oil company Petroleos de Venezuela SA, which has large payments due this year, is likely to default before the sovereign, the credit ratings company said. That, in turn, could imperil government finances to the point it won’t be able to make payments either, according to the report.

Venezuela is convulsing from hunger, the International New York Times reported. Hundreds of people here in the city of Cumaná, home to one of the region’s independence heroes, marched on a supermarket in recent days, screaming for food. They forced open a large metal gate and poured inside. They snatched water, flour, cornmeal, salt, sugar, potatoes, anything they could find, leaving behind only broken freezers and overturned shelves. And they showed that even in a country with the largest oil reserves in the world, it is possible for people to riot because there is not enough food.

Whether crisis-ridden Venezuela will default is a question increasingly on the minds of bond traders. It’s now also one that is getting front-page treatment from China, one of the Latin American country’s biggest financial backers, Bloomberg News reported. On June 11, the People’s Daily -- the mouthpiece paper of China’s Communist Party -- published an article in its overseas edition with the headline “Will Venezuela Default?” After considering its willingness and ability to pay, the author concludes the answer is no and chalks up all the talk about default to media speculation.

An economic, social and political crisis facing Nicolás Maduro, Venezuela’s unpopular president, is being aggravated by a rise in violence which is prompting fears that this oil-rich country risks becoming a failed state. Critics say that the Venezuelan government is increasingly unable to provide citizens with water, electricity, health or a functioning economy which can supply basic food staples or indispensable medicines, let alone personal safety. All this is creating a broad unease that Mr Maduro is unable to maintain order.

Acute energy shortages, historically a warning sign for unpopular Latin American leaders, are threatening to undermine the government of Colombia and plunge neighbouring Venezuela deeper in to crisis, the Financial Times reported. Free-market Colombia, until recently a regional star, and the crisis-ridden, socialist Venezuela have both been forced to introduce energy-saving measures amid a combination of factors aggravated by a lack of rain due to the El Niño weather phenomenon. Venezuela’s government even extended the Easter holiday from three to five days to save electricity.