The Economic Impact of COVID-19 on Venezuela: the Urgency of External Financing

We briefly describe the macroeconomic performance before the spread of the coronavirus (COVID-19), which is mainly characterized by severe economic depression, economic and financial sanctions by the Trump administration, and tight fiscal space that constrains to undertake additional measures. We estimate three economic scenarios based on different oil price assumptions for 2020. The negative effects of the quarantine on the economy are estimated using the two biggest shocks faced by Venezuela in its recent history. We emphasize the relevance of foreign currency and external financing to mitigate the pandemic’s impact. Finally, we discuss the economic measures taken by the government.