“U.S. Ready to Join in Giving $2 Billion Loan to
Venezuela,” New York Times, March 4, 1989
Main Point
The Bush Administration, and other commercial banks are preparing $2 billion emergency loan to Venezuela to accommodate the need of unstable economy of Venezuela.
A civil rioting broke out after the newly elected Government raised fuel and transportation price to slow down the economy and reduce inflation. As a result, Venezuela government stated that the debt payment will be slowed down. In reality, the debt payment is suspended, and resume once the government receives enough funds.
This crisis raised futility of American debt policy. The American debt policy is bringing down living standard of debt nations, and jeopardizing their democratic government. The World Bank states that maintaining low inflation and other characteristics of sound economic policy are essential to assure a debt nation’s economic growth. However, such a policy is impossible in debt nations. The possible solution is to reduce interest rates in debt.
Officials stressed that receiving loan of such a magnitude is a little difficult. However, A World Bank official said that the loan is ready to go, and new loan is in the works.
Summary
by Dohyung Kim