4 Steps To Fix Venezuela’s Economy

The best estimates and forecasts for the Venezuelan economy have come from Bank of America Merrill Lynch (BOA). Unlike the IMF, which was not even in the ballpark in their forecast for 2015 GDP, BOA was on target. (Using a statistical model, BOA even correctly forecast the December National Assembly election results.) BOA estimates that Venezuela has a public sector financing gap, which includes principal payments on the debt — of about $24 billion for 2016, and that about $5 billion will be covered by Chinese loans. Looking at the economy as a whole, the current account (mostly trade) deficit was about $18 billion last year. BofA also estimates that the government has about $60 billion in assets that it can sell for U.S. dollars, including its international reserves. So, the country is not broke yet — there is still at least another year to turn the economy around, or possibly more, depending on oil prices. More…