Mercadante says Venezuela will pay debt with oil – 05/06/2023 – Market

The president of the BNDES (National Bank for Economic and Social Development), Aloizio Mercadante, said this Monday (5) that Venezuela is unable to pay its liabilities with the Brazilian government in foreign currency and the trend would be to settle it in electricity and oil. .

According to Mercadante, liabilities with the BNDES were almost entirely covered by the Export Guarantee Fund, with a small portion remaining. The bank informed that Venezuela received in contracts to support the export of engineering services US$ 1.5 billion (R$ 7.40 billion), of which US$ 40 million are overdue and will be compensated by the FGE. The outstanding balance is US$ 84 million.

US$ 682 million in overdue installments have already been compensated by the FGE.

“A country doesn’t go bankrupt, it delays. Brazil has already defaulted on its foreign debt. Venezuela has publicly stated its willingness to resume payment, the negotiation is directly with the Treasury on behalf of the Export Guarantee Fund,” Mercadante told journalists in bank event.

Finance Minister Fernando Haddad announced last week that the federal government will create a working group to consolidate Venezuela’s debt with Brazil.

From this diagnosis, the schedule for the payment of debts will be organized.

The president of the BNDES highlighted the growth of Venezuela’s economy in 2022, a sign that the country may find ways to settle its liabilities.

Among the alternatives would be payment through Venezuelan oil and electricity.

“They don’t have dollars available, the exchange reserves were seized,” he said.

Last year, the Venezuelan economy grew 6%, after falling 75% in six years.

“It is impossible to expect that a country in this condition of economic blockade and oil crisis could honor these commitments,” said Mercadante. “Energy can be considered as payment,” she added.

The BNDES financed the export of engineering services by Brazilian companies abroad during the PT governments. The country where the work was carried out was responsible for financing. In case of non-payment, the FGE was used to cover the liability.

President Luiz Inácio Lula da Silva met last week with the leader of Venezuela, Nicolás Maduro, on his first visit to Brazil since 2015, and the liabilities of the neighboring country were on the table of discussions. At the end of the meeting, Maduro also mentioned the creation of the commission to establish the size of the debt, allowing the resumption of payments.