The grim task of sifting through debris in La Guaira continues, and the financial toll of Venezuela’s latest disaster is becoming as uncertain as the human one. For a country already battered by hyperinflation and capital flight, the cost of reconstruction will pile onto an already mountainous debt burden. Investors, already wary of Venezuelan bonds trading at pennies on the dollar, will eye the government’s response.
Any signs of fiscal recklessness, such as printing more bolívars to fund relief, will only accelerate the currency’s collapse. The tragedy exposes the hollow shell of Venezuela’s economy: a state that cannot even maintain basic infrastructure without foreign aid. Markets, as ever, will price in the risk.
And that risk is rising with every shovelful of rubble.
