By Allison Fedirka
Venezuela’s ability to make its debt payments – thereby avoiding default – has once again come into question. A similar issue arose at the start of 2015, which ultimately ended with Caracas managing to meet its debt commitment. However, a year later Venezuela and the rest of the world find themselves in a markedly different reality. Caracas is starting 2016 with $6.3 billion less in reserves compared to this time last year, while previously reliable foreign lenders – China, Iran and Russia – face financial challenges of their own. Oil prices have not recovered and now appear to be comfortably hovering around $30 per barrel. Therefore, commodity exporters are finding themselves in crisis. Although Venezuela managed to avoid default last year, it faces more constraints this year and has limited options. Speculation around a default this year continues to mount as avoiding a major credit incident will become increasingly difficult for the government.
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