Stopping Debt Payments Could Worsen Venezuela's Crisis

Stopping Debt Payments Could Worsen Venezuela's Crisis

Venezuela is struggling to pay back an estimated $150 billion in debt.

The country’s financial crisis only makes life worse for people like Luber Faneitte.

Faneitte lives in a run-down building in downtown Caracas. She receives disability payments from her job and survives on less than $9 each month.

Faneitte lives with a daughter and four grandchildren. They all depend on her small income. She struggles to have enough food to eat and to pay her bills. She depends on food the government sells once a month at reduced prices.

Health problems add to her worries. Faneitte has lung cancer. Doctors say she needs chemotherapy to treat her cancer. But Faneitte stopped chemotherapy in January because of the severe shortage of medicine.

Instead, she prepares a homemade mixture of liqueur, honey and aloe vera.

“I leave it outside for two days, then I take a spoonful in the morning and another at night. I think I breathe much better when I take it,” she said.

The poor in the South American nation are especially suffering because of the economy. The International Monetary Fund predicts that inflation will reach 2,300 percent in 2018.

A member of the Organization of Petroleum Exporting Countries, or OPEC, Venezuela depends on oil for almost all of its export income.

But oil prices remain low. That means Venezuela has less money to import many goods that it needs. The decrease in imports has worsened the seemingly endless shortages of basic supplies such as soap and toilet paper.

The idea of Venezuela ending its debt payments is seen as a possible short-term political gain for the country’s largely unpopular President Nicolas Maduro. He is expected to seek re-election in 2018.

If Maduro stops debt payments, or declares default, the money could be used to buy imports and do election campaigning. It would also decrease the risk of street protests.

But experts say the long-term effect of defaulting would be extremely bad. Alejandro Grisanti is with the group Ecoanalitica which provides business advice. He says Venezuela would face legal action from its creditors. It would also have its property held in foreign countries seized as a result.

Maduro has said he wants to refinance and restructure Venezuela's debt. But the idea of default is a looming concern for people who could be affected.

I’m Jonathan Evans.

This story is based on a report from Agence France-Presse. Jonathan Evans adapted it for Learning English. Mario Ritter was the editor.

Words in this Story

run-down – adj. being in poor repair

chemotherapy – n. the use of chemicals to treat or control a disease such as cancer

liqueur – n. a sweet, strong alcoholic drink that is usually flavored with fruits or spices and drunk in small glasses after a meal

default – n. a failure to make a payment, such as a payment on a loan

looming – adj. something close to happening, used especially of unpleasant or frightening things