International credit rating agency Fitch does not expect the recent United States ouster of Venezuela President Nicolas Maduro to immediately impact credit ratings of Barbados and other countries in the region.
However, it says that over the longer term, a restoration of Venezuelan oil supply has price-related relevance for Latin America and Caribbean oil-dependent economies like Barbados.
Fitch shared this view in US Action In Venezuela Underscores Its Western Hemisphere Ambitions, a January 6 commentary on Maduro’s removal and its implications on the region.
“The immediate and longer-term outcomes of the United States’ removal of Venezuelan leader Nicolas Maduro are highly uncertain, but they could have geopolitical implications in terms of greater US influence and power in the Western Hemisphere,” Fitch Ratings said.
“Nevertheless, we do not expect Maduro’s ouster to lead to any immediate sovereign rating actions, in part because of Venezuela’s limited trade and financial linkages with the rest of the region.”
It added: “Over a longer time horizon, a restoration of Venezuelan oil supply could affect prices, which would be relevant for the region’s oil dependent economies, but this would be highly dependent on other global supply and demand factors.”
Fitch said that “the ratcheting-up of US political pressure on Venezuela and a military build-up in the Caribbean in 2025 had increased the likelihood of a geopolitical event”.
“Various public comments from both sides indicate that some kind of accommodation between the US and a post-Maduro Chavista regime is possible,” it noted.
“But the sustainability of such an arrangement would be uncertain. President Donald Trump has said that he could launch ‘a second strike’ on Venezuela if US demands are not met and an escalation cannot be ruled out.
“If the removal of Maduro and/or military escalation led to major political dislocation within Venezuela, this could increase security and macro-economic challenges in nearby countries.
“But absent this, we expect near-term spillovers to be contained. Neither Venezuela nor its smaller neighbours, Guyana and Trinidad and Tobago, have public ratings assigned by Fitch. Aruba (BBB-/Positive) could see disruptions to its tourism sector,” the credit rating agency added.
It observed that “Maduro’s removal is consistent with the reassertion of the Monroe Doctrine that places the Western Hemisphere – from Greenland to the Caribbean and Latin America – at the centre of US foreign policy and aims to limit China and Russia’s influence, as outlined in the National Security Strategy published in November”.
“Shifts in US trade and migration policies since Trump returned to office a year ago have not had severely negative consequences for Latin American and Caribbean countries so far,” Fitch said.
“But events in Venezuela could have a powerful demonstration effect on these countries’ orientation towards US priorities under Trump, their view of the credibility of US threats and their willingness to respond to US policy demands.”
