Some of the 14 hopefuls in the Oct 22 primary have begun to share their plans for reviving Venezuela’s battered economy – which shrank for eight consecutive years amid crisis in the oil sector, state controls, and US sanctions.
A de-facto dollarisation and more controlled inflation allowed a slight recovery last year, but the economy is once again slowing and annual inflation was 404% through June.
Venezuela’s often-divided opposition is seeking to dislodge president Nicolas Maduro, who has ruled the country since 2013. The last election he won in 2018 was widely condemned by Western democracies as fraudulent.
Several opposition candidates have already been barred from holding public office, including Maria Corina Machado, who despite the ban – which she received for supporting US sanctions on the government – is ahead in opinion polls for the primary.
The primary is being held without state support, so bans are moot, but disqualified candidates would not be able to register for the general election, an eventuality that is the subject of an ongoing debate within the opposition.
Campaigning has also continued despite an effort to get Venezuela’s top court to suspend the primary on unspecified allegations of irregularities and a ruling party leader’s pledge not to allow European Union election observers.
Should she eventually triumph, Machado would tie debt restructuring to private investment, said Sary Levy, an economist and Machado adviser.
Debts owed by Venezuela and its state-run oil company PDVSA total more than US$60 billion, not including potential repayments of more than US$10 billion for past expropriations.
“Of bonds that arise from the debt restructuring, some could be eligible for a swap of debt for investment in a program of privatisations that includes the oil sector,” said Levy. Machado would try to reestablish suspended relationships with lenders like the International Monetary Fund, World Bank, and Inter-American Development Bank.
Cristofer Correia, an adviser to opposition candidate Freddy Superlano, said, “We want to recover confidence and look for agreements (with bondholders) that benefit stakeholders,” adding that Superlano would seek international financing to recover Venezuela’s manufacturing.
Another primary candidate, Carlos Prosperi, also backs renegotiations but says the amount of debt that could be restructured must be evaluated, given ongoing court cases in the US, according to his economic adviser Armando Jaen.
Negotiators representing Venezuela have held settlement talks with bondholders and creditors, whom Maduro stopped paying in October 2017 amid the lower oil income and sanctions.
Some creditors are moving ahead with a lawsuit meant to force the sale of shares in a parent company of state-owned refiner Citgo Petroleum, to enforce judgments for past expropriations.
Meanwhile, some small funds and investors outside the US are looking to increase their exposure to Venezuelan bonds, on the expectation of renegotiations or legal action.
Henrique Capriles, a two-time opposition candidate and current hopeful, has said talks must be held with creditors to preserve Citgo.
“Losing the refiner is a problem for the country,” Capriles told Reuters in June.
Barclays said this month the 2024 elections could present a window of opportunity to find a solution to Venezuela’s political crisis, a pre-requisite for sovereign debt restructuring, but added that it was too early to draw conclusions about the outcome of the elections.
The opposition is crafting a proposal to redirect about 200,000 barrels per day of oil exports to pay creditors, an opposition official said this month.