December 17, 2013 / 12:05 AM / 4 years ago

Moody's downgrades Venezuela, warns of economic collapse

Dec 17 (Reuters) - Moody’s Investors Service downgraded Venezuela’s credit rating on Monday and warned it could cut them again given what it saw as the growing risk of an economic and financial collapse in the country.

Moody’s said it cut Venezuela’s local and foreign currency ratings to Caa1, from B1 and B2 respectively, while the outlook for the rating was negative.

“The downgrade reflects Moody’s view that Venezuela is facing increasingly unsustainable macroeconomic imbalances, including a sky rocketing inflation and a sharp depreciation of the parallel exchange rate,” the agency said.

“As government policies have exacerbated these problems, the risk of an economic and financial collapse has greatly increased.”

Moody’s said the negative outlook reflected its expectation that conditions would continue to deteriorate. However, the outlook could stabilize if macroeconomic imbalances are reduced to levels that do not threaten an economic collapse.

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