James Fontanella-Khan

Hi there.

Well, the way Venezuela got here is that it was kind of cut out of the international markets under the authoritarian leadership of President Nicolas Maduro, who was removed by the US earlier this year.

And so during that period, Venezuela, which has undergone an incredible contraction, and also for the longest time, we've never really known exactly how bad the situation was.

And essentially now they're trying to restructure the country's debt and institutions.

This restructuring will allow it to reenter that international market.

And what that means is they need to figure out how to avoid defaulting on the debt repayments that they need to make.

The country needs to sit down with its creditors and decide how are we going to, like –

sort this out.

Maybe there's a way that I can pay you some money back and you can forgive some of the debt and so that you can then clear that debt altogether.

So we've revealed that Venezuela, together with the help of its advisor, Centerview Partners, which is a New York investment bank, will, by the end of this month, be giving a macroeconomic framework.

And some of the points in our reporting will tell us the economy changes.

has shrunk by about two thirds from 2012, which is when Hugo Chavez, Maduro's predecessor, was in power.

So given that we know the debt power is going to be around 240 billion, this is a debt to GDP ratio of above 200 percent.

Whenever you have a restructuring, it's never straightforward, obviously because nobody likes losing money.

And so the bondholders are concerned about the kind of the haircut that they are going to suffer potentially.

And, you know, given the debt pile, which is bigger than expected, it's potentially that that haircut might be also bigger than expected.

Some bondholders would like the International Monetary Fund to be involved.

That's kind of fairly common in other situations.

What we do know is that although Venezuela is not officially working with the IMF on this right now, it is kind of in consultation with them.

And so it's possible that the IMF will at some point be involved.