Russia, China debt relief, Venezuela confident in ensuring debt repayment

Responding to information from European and American media about Venezuela being classified as "partially bankrupt", the Caracas government still strongly declared that it would ensure timely debt repayment.

» Russia extends a helping hand to Venezuela amid its debt crisis

President Nicolas Maduro (center) during an event to talk to workers in the capital Caracas, November 14. Behind him are essential goods - Photo: REUTERS

On November 15, Venezuela's state-owned oil company PDVSA announced that it had completed its obligation to pay interest to bond investors with a maturity date until 2027, as well as repay the group's bonds this year with a total value of 200 million USD.

The announcement came after credit rating agency Standard & Poor's (S&P) downgraded the country's government bond rating to "partial default".

Earlier information said that on November 3, the oil and gas group paid a bond debt due for 1.2 billion USD. This is the second debt payment of PDVSA in a week after the group paid 842 million USD including the bond debt due and interest.

According to AP news agency, PDVSA group affirmed that completing obligations on time with investors shows Venezuela's "solid economy and production capacity".

PDVSA also said that negotiations on restructuring loans with investors had also achieved good results.

In another message, PDVSA asserted that foreign attacks and attempts to strangle the Venezuelan economy had failed.

Russia and China extend debt relief

On the same day, November 15, President Nicolas Maduro's administration also announced that it had completed restructuring the $3.15 billion debt to Russia that Caracas borrowed since 2011 to buy weapons.

The deal allows Venezuela to pay off the debt over 10 years, with minimum payments in the first six years.

Venezuelan Vice President Wilmar Castro, who participated in negotiations with Russian partners, affirmed that Caracas's agreement to restructure its debt is proof that the international financial community has confidence in the South American country's economy.

In addition, President Maduro's government also received support from China, the country's largest creditor. The Chinese Foreign Ministry's statement emphasized that Venezuela has the ability to properly handle its foreign debt.

Speaking at a press conference on November 14, Chinese Foreign Ministry spokesman Geng Shuang said that China-Venezuela financial cooperation is progressing smoothly. Beijing believes that the Venezuelan government and people have the ability to resolve the country's debt problem.

President Maduro still appeared confident and smiled at an event held in the capital Caracas on November 15 with his supporters. Photo: Reuters

According to government statistics, in the past three years, Venezuela has fulfilled its commitment to pay foreign debt totaling 73.539 billion USD.

Debt restructuring is a risk for investors. However, in the case of Venezuela, the debt is still being paid. Les Echos newspaper quoted a fund manager as saying that his fund's risky investments in Venezuela's debt have brought in annual returns of 20-25% in the last two years.

According to AFP news agency, on November 13, the Caracas government announced that it had initiated negotiations to restructure foreign debt with investors from the US, Panama, UK, Portugal, Colombia, Chile, Argentina, Japan and Germany.

Caracas said it was a "resounding success" while European and American media reported that the meeting ended after less than 30 minutes without reaching any commitments with the lenders other than a promise to "meet again".

According to experts, Venezuela's current foreign debt is up to 150 billion USD, including 45 billion USD in public debt, 45 billion USD in PDVSA debt, 23 billion USD in debt to China and 8 billion USD in debt to Russia. The amount of interest that Venezuela must pay from now until the end of the year is about 1.4 billion - 1.8 billion USD.

Most of the debt to China and Russia will be paid in oil. Oil is the South American country’s main source of foreign currency, accounting for 95% of its total exports. However, the sharp drop in oil prices has plunged Venezuela into an economic crisis over the past year, leading to shortages of goods.

According to tuoitre.vn