Fitch Ratings cut Venezuela's rating further into junk territory Thursday, saying that falling oil prices are pressuring the country's already-troubled finances.
Fitch cut Venezuela's foreign and local currency issuer default ratings, as well as its unsecured bonds ratings, from B to triple-C.
Fitch said oil is expected to account for about half of the government's revenue this year. With prices in free fall, the country is facing increasing instability, balance of payment pressures and inflation issues.
Compounding the issue is Venezuela's limited access to external financing, constrained liquidity and a lack of available data on how bad things actually are, Fitch said. Fitch said it expects Venezuela to remain in a recession through next year.
Venezuela has recently turned to food rationing because of shortages caused by what economists call a toxic mix of unproductive local industry--hamstrung by nationalizations and government intervention--and a complex currency regime that is unable to provide the dollars importers need to pay for basics.
The tumbling price for Venezuela's oil is likely to mean even more scarcity in the cash-strapped country where inflation has skyrocketed, economists say.