Venezuela to Pay $500 Million of Bank Loans Ahead of Schedule

[Judi Lynn]

Venezuela to Pay $500 Million of Bank Loans Ahead of Schedule
Oct. 18 (Bloomberg) -- Venezuela, the world's fifth-largest oil exporter, plans to pay back ahead of schedule more than $500 million of loans this year to banks such as Citigroup Inc. and Deutsche Bank AG, a Finance Ministry official said.

The government will fund the payments by using part of the $4 billion it took from the central bank's foreign reserves in recent weeks, said the official, who asked not to be identified by name.

Venezuela, which forecasts a budget surplus this year amid a surge in oil prices, plans to earmark as much as $1 billion of the foreign reserve funds this year to pay down debt and a similar amount in the first half of next year as part of an effort to cut debt, the official said. He said the government may use some of that money to buy back bonds.

The South American country aims to lower its debt to the equivalent of 30 percent of gross domestic product by 2008 from 38 percent of GDP this year, Finance Minister Nelson Merentes told reporters today in Caracas. Debt totaled 46 percent of GDP in 2003.
(snip/...)

http://quote.bloomberg.com/apps/news?pid=10000086&sid=aCXHTNSQOM4M&refer=news_index

[SteppingRazor]

1. Ah, the joys of being an oil exporter n/t

[bemildred]

2. Damn Socialists.

:rofl::rofl::rofl:

[Shakespeare]

3. Amazing what you can do when you tell the World Bank to fuck off.

More third-world countries should follow Venezuela's example.

[SoCalDem]

4. Sounds like a smart move.. Pay ahead when you can

eliminate debt, and take control of your own future.. A debt-free country is truly in control of its own future.

[Gronk Groks]

5. Lower your Debt, what a novel idea...

...oh wait, Clinton did it for a couple of years didn't he???

Meanwhile shrub has run up the debt how many trillions??

Republicans, fiscally responsible? You have GOT to be joking !!!

[Voltaire99]

6. Another reason Hillary will lead the invasion of Venezuela.

Neoliberals can't have a successful socialist on their borders. Why, it's just not good for business--the debt peonage business! ;-)

Fuck neoliberals and viva Hugo!

[damntexdem]

9. And don't forget to fill up at CITGO.

Don't support those putting us all into debt, support those at least getting Venezuela out of it.

[Voltaire99]

10. Every chance I get.

The best political donation one can make today.

[1932]

7. That will deny interest profits and it will take out of jeopardy

whatever collateral the Perez government offered for those loans.

Incidentally, the back-story here -- according to Wikipedia -- is that the Perez government (after starting off as anti-IMF) ended up borrowing 4.5 billion from the IMF. When oil prices fell in the 80s, it devastated the economy. The IMF told Venezuela to get the money to pay the loans by hiking fees on public services (and I'm guessing, by selling off public sector industries that Perez had nationalized earlier).

The misery that caused resulted in protests which Perez contained with violence committed by police forces. That encouraged two failed coup attempts, the first of which put Chavez in jail.

Fortunately, for Venezuela, the backlash to all this resulted in an 82 year old former president (and academic, and Chavez's godfather) winning the next election on a progressive platform. He pardoned Chavez and when Chavez ran in '98, he won that election on a substantially similar platform.

Venezuela was so devastated by the 4.5 billion owed to the IMF that, during the oil sector strikes in 2003, Venezuela had no money at all. This turn around has been achieved mostly in the last couple years and it's due to oil prices.

[alcibiades_mystery]

8. But if they pay it back with their own money

How can Citigroup and Deutsche Bank and Goldman Sachs underwrite the next batch of Venezuelan bonds (which are designed the pay back the previous batch, and only issued at 1% more interest)?

:rofl: :rofl: :rofl:

Somewhere, right now, an investment banker who's counted on steady income from issuing new Venezuela debt to pay back old Venezuela debt...is crying....