MercoPress. South Atlantic News Agency

Bank of America anticipates strong devaluation for bankrupt Venezuela

Maduro is expected to merge the three-tier currency controls into two, taking the dollar to a level of 35 bolivar. Black market greenbacks are traded at 865 bolivars

Bank of America predicted president Nicolas Maduro would merge Venezuela’s three-tier currency controls into two, replacing the strongest rate of 6.3 bolivars to the dollar with a level of 35. Greenbacks go for around 865 bolivars on the black market.

 Bank of America also forecast Maduro would raise the price of the world’s cheapest gasoline: a large tank can be filled for one US cent at the black market rate. It said he may also consider a debt moratorium or restructuring.

Venezuela depends on oil for about 96% of hard currency revenues. The average price for its basket of oil and refined products fell this week to US$24.38, its lowest in more than 12 years.

“The biggest loser in Latin America of the decline in oil prices is clearly Venezuela. At this point, a credit event in 2016 seems difficult to avoid,” Barclays said in a research note.

It foresaw a government financing gap of nearly US$30 billion in 2016, for which it could receive US$6.7 billion in financing and would need to find US$22.7 billion from its assets.

“This would push assets below what we consider minimum operational levels,” Barclays said.

The heaviest payments in Venezuela’s roughly US$10 billion foreign debt bill for 2016 come in October and November.

The government blames its woes on the global oil scenario and sabotage of the economy by its foes.

“Venezuela is suffering a new generation economic war promoted by web pages which fix the bolivar-dollar relation without any criteria or economic substance,” the central bank complained, referring to the Dolar Today website that publishes a black market currency price to the fury of the government.

The opposition coalition says policy incompetence is responsible for Venezuela’s economic mess. It has said it wants to find a constitutional way this year to remove Maduro.

“An emergency economic degree without clear objectives ... is only going to worsen the situation,” tweeted local economist Luis Oliveros, a frequent government critic.

According to the Central Bank, Venezuela’s current account deficit was US$5.05 billion in the third quarter, hurt by the tumble in prices for its main export.