Venezuela’s bills keep piling up.
The country, which is engulfed in crisis, owes $251 million to bondholders on Monday.
The payment comes after a weekend in which the attorney general was kicked out of office, a controversial legislature took power, and the military thwarted an alleged attack by a small paramilitary group.
Experts anticipate that Venezuela will make the payment to bondholders. But it has other payments coming due in the near future and could fall short on those if the economy continues to tailspin and the United States hits it with heavy sanctions.
"This model is broken, and default is inevitable," says Siobhan Morden, an expert in Latin American bonds at Nomura Holdings. Oil "sanctions will probably arrive sooner and force default sooner."
President Trump slapped sanctions on Venezuelan President Nicolas Maduro following a July 30 vote that allowed Maduro to replace the opposition-held National Assembly with a new legislature filled with his supporters.
Most countries around the world have dubbed the vote fraudulent and say the new Constituent Assembly is a sign of a dictatorship.
The Trump administration says harsher sanctions could come if the political situation continues to deteriorate. The ousting of Attorney General Luisa Ortega, along with oppressive police tactics against protesters, quickly proved the new government went against the international community's demands to restore democracy.
Trump's big weapon to retaliate: A ban on Venezuelan oil, the country's only source of income. The government's cash pile would quickly dry up if it couldn't sell to the United States, one of its top customers.
Beyond sanctions, Venezuela's economy continues to spiral our of control. The unofficial exchange rate that most Venezuelans use has more than doubled since late July. Inflation is expected to soar 720% this year and and over 2,000% next year, according to the International Monetary Fund.
Venezuela owes about $5 billion to bondholders for the rest of this year, and it has only $10 billion in the bank. It also owes billions more to China, Russia, energy companies and U.S. airlines.
Against that backdrop, experts say more sanctions from the White House would give Venezuela few options but to dry up its cash pile and miss payments.
"The U.S. has so far refrained from taking measures that would harm Venezuela's oil industry. Such a move would likely hasten a default scenario," says Win Thin, head of emerging market currency strategy at Brown Brothers Harriman, a private bank.