Russian Federation extends lifeline as Venezuela struggles with 'selective default'

18 November, 2017, 02:11 | Author: Brenda Erickson
  • Russian Federation extends lifeline as Venezuela struggles with 'selective default'

The government signed a 10-year restructuring deal with Russian Federation on Wednesday for a little over $3 billion in official debt, but observers say that will at best help resolve some payments in the short-term.

Participants at the meeting told AFP that officials said the government meant to form working groups to evaluate short- and mid-term debt renegotiation proposals, but gave no specifics. It noted that payments will be "minimal" during the first six years.

The text also read that the Amendment to the Financing Protocol refers to reduction of the financial burden, which will favor the release of funds to meet the Venezuelan people's needs and the economic development of the South American country.

The deal was signed a day after Venezuela hosted foreign investors to discuss strategies for reorganizing its debt.

"These are very favourable terms that Venezuela can honour".

However, Moscow and Beijing - Caracas' two main creditors - appear willing to aid the oil-producing nation, with China's foreign ministry issuing a statement on Wednesday saying it has confidence Venezuela could "properly handle" the unfolding debt crisis.

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PDVSA said the payment of its 2027 interest bond has already been made, and "we clarify before the global financial market that the payment of capital of the 2017 and 2020 PDVSA bonds were also performed successfully".

Venezuelan bond prices have been on a roller-coaster over the past 10 days, as President Nicolas Maduro called investors to debt restructuring talks, while pledging to keep honoring the country's obligations.

"We pay our debts, despite what the ratings agencies, the US Treasury, the European Union or (US President) Donald Trump say". There seems to be no way for Maduro to avoid defaulting on at least that portion of the debt.

A full default - recognition that Venezuela is unable to repay its massive debt - would have enormous consequences for the country, whose population is already suffering severe food and medicine shortages because of a lack of money to import them.

Though the government declared the meeting a "resounding success" the Eurasia research group is more skeptical.

Venezuela's envoy to the UN, Rafael Ramirez, called the meeting a "hostile" act of United States "interference".

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