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Venezuela urges creditors to restructure debt

November 4, 2017

Venezuela has called its creditors to a debt-restructuring meeting in a week’s time but made a show of servicing loans owed by its state oil company. This follows further downgradings by two credit-rating agencies.

Venezuela Caracas Demonstrationen
El Aissami behind President Maduro at a 2017 May Day rallyImage: Getty Images/AFP/C. Becerra

Vice President Tareck El Aissami sought to reassure creditors and Venezuelans via television, saying Caracas had begun to pay out $1.2 million (1 million euros) to service debts of its state oil company PDVSA.

The nation led by controversial President Nicolas Madura, which ran up massive debts before global oil prices slumped, is estimated to owe $120 billion despite sitting on massive oil reserves.

Rating agency Standard and Poor's cut Venezuela's long-term foreign currency rating to "CC" on Friday. Fellow agency Fitch lowered Venezuela's long-term debt rating to "C."

The restructuring talks were scheduled for November 13, said Aissami, one of several Venezuelan officials sanctioned by the USA for alleged ties to drug trafficking.

El Aissami said those talks would proceed despite what he called "imperialist sanctions" – a reference to fresh US sanctions imposed in August to restrict trading in new dollar-bonds.

Chunks of Venezuela's debt are held by China and Russia, to be paid off in oil. A default could see investors lay claim to PDVSA assets, including tankers, to offset $45 billion owed by the state oil concern.

Venezuela: Crushing burden of debt

Struggling to find basics

Scarcity of cash, coupled with triple-digit inflation, has left many Venezuelans struggling to obtain basic groceries.

An analyst at the London-based HIS Markit, Diego Moya-Ocampos, said Venezuela's options to keep up with its debt payments were "shrinking rapidly.”

Although, since 2014, Venezuela has paid nearly $72 billion in principal and interest payments, it is estimated to hold less that $10 billion in foreign currency reserves.

On Friday, the International Monetary Fund (IMF) sanctioned Venezuela for not providing economic data as required of all its 189 member states.

Opposition lawmaker Stalin Gonzalez accused the Maduro government of mortgaging "the future of Venezuelans."

The news agency AFP meanwhile announced the release of jailed opposition figurehead and lawyer Yon Goicoechea and a local mayor Delson Guarate, citing another opposition deputy Juan Andres Mejia.

Opposition party leader Leopoldo Lopez remains under house arrest.

ipj/rc (AFP, AP)

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