Moody's notes risk of US dollar shortage in Venezuela

At the end of March, the Central Bank of Venezuela's balance sheet shows that international reserves backed by gold have increased and represent 61.5 percent of total reserves (File photo)

Economy
In a report on Venezuela, dated April 27, risk rating agency Moody's said that the country's external credit has deteriorated, and questioned the possibility of adjustments ahead of elections.

Patrick Esteruelas, a sovereign risk analyst for Latin America, said that the public sector's borrowing is growing, while cash reserves are falling despite high oil prices.

He added that there is a growing deterioration amidst fears that the government could face "an imminent shortage of US dollars."

However, Moody's stressed that Venezuela's level of debt is manageable and that the balance of payments will receive an important boost due to rising oil prices and signs that oil production is becoming more stable.

The US firm forecast that the government will boost growth and expand imports ahead of 2012 presidential elections, thus increasing Venezuela's dependence on high oil prices and the country's vulnerability to potential price decline.

At the end of March, the Central Bank of Venezuela's balance sheet shows that international reserves backed by gold have increased and represent 61.5 percent of total reserves.

While a growing portion of international reserves are backed by gold, cash reserves have diminished, that is to say, there has been a reduction in dollars or other instruments in cash that can be immediately available.

Translated by Gerardo Cárdenas

Víctor Salmerón
EL UNIVERSAL