Russia offers debt relief to monetarily-burdened Venezuela

Economy - Mohit Shah - Nov 16,2017

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russia offers debt relief to monetarily burdened venezuela

Russia has actively agreed to streamline $3.15bn (£2.4bn) in debt associated with Venezuela, offering a significant aid to the financially chained country.

On Wednesday, Russia announced a debt restructuring deal with Venezuela which allows the debt-stricken nation to make a “minimal” payment over the next six years. Further, a vote of confidence from China is also part of the deal that makes the settlement quite rigid.

Russia and China are spotted as the main allies of Venezuela, which has factually relied on the vast oil wealth to sustain its economy and sponsor its government.

The news of the deal was issued the next day after credit rating agencies launched concerns regarding Venezuela’s recently missed debt interest payments. It is believed that Venezuela owes a projected total of $140bn to different foreign creditors.

If similar debt forgiveness like the one offered by Russia continues in the near future, Venezuela can receive a lifeline to come out from the strictly depressed economic condition.

As per the deal specifics with Russia, Venezuela has agreed to pay back a total of $3.15 billion during a period of 10-years. The Russian Finance Ministry announced that the agreement is expected to free up more funds to permit Venezuela re-shape its economy. The ministry added this would work to “improve the debtor’s payment ability”, enhancing the chances for the various creditors receiving their respective loans back.

According to a Kremlin spokesman, Venezuela did not request Russia for any help beyond the approved deal. Furthermore, China Foreign Ministry’s statement stressed on cooperation with Venezuela across different areas, in addition to the vote of confidence to back this debt relief deal.