Accessibility links

Russia, Venezuela Sign Deal To Restructure More Than $3 Billion Of Debt


Venezuela has been beset by political unrest for months, with President Nicolas Maduro's government being accused by protesters at home and Western governments of becoming increasingly authoritarian.

Russia and Venezuela have signed a debt-restructuring deal under which Caracas will pay Moscow back $3.15 billion over a 10-year period.

The Russian Finance Ministry said on November 15 that debt repayments would be "minimal" during the first six years, as the South American country continues to face an economic and financial crisis.

Addressing reporters in Moscow, Venezuelan Economy and Finance Minister Simon Zerpa said that funds borrowed from Russia by Venezuelan firms, including state oil company PDVSA, were not part of the agreement, .

The terms of the deal are quite flexible and favorable for Caracas, according to Venezuelan Vice President for Economics Wilmar Castro Soteldo.

Venezuela is seeking to restructure its foreign debts, estimated at more than $140 billion, after a drop in crude output and prices ravaged its economy, leading to triple-digit inflation and widespread shortages.

Venezuela borrowed from Russia in late 2011, but failed to keep up with payments on the debt last year.

This week, international credit-ratings agency Standard & Poor's declared the country to be in "selective default" after it failed to make $200 million in repayments on its foreign debt. PDVSA has also been declared in default by rating agencies Fitch and Moody's.

Caracas has blamed sanctions imposed by the United States for Venezuela's difficulties in making debt repayments.

Venezuela has been beset by political unrest for months, with President Nicolas Maduro's government being accused by protesters at home and Western governments of becoming increasingly authoritarian.

At an informal UN Security Council meeting boycotted by permanent members Russia and China, U.S. Ambassador Nikki Haley called Venezuela "an increasingly violent narco-state" that threatens the world.

Meanwhile, Venezuela has had friendly relations with Russia under the late socialist leader, Hugo Chavez, and his successor, Maduro, both of them foes of the United States.

During a visit to Moscow last month, the embattled Maduro thanked President Vladimir Putin for both political and diplomatic support as well as Russian wheat deliveries, which he said "helped to ensure stable consumption" in his country.

Venezuela became the largest external source of crude oil for Russian state giant Rosneft a few years ago, and Rosneft has provided advance payments to Venezuela's state oil company to support Maduro's government.

With reporting by Reuters, Interfax, and Bloomberg
XS
SM
MD
LG