March 4, 2020 / 12:24 AM / a month ago

Venezuela to sell shares in CAF development bank to pay debt: opposition

CARACAS (Reuters) - Venezuela will sell some of its shares in the CAF Latin American development bank to pay down its debt with the lender, according to an opposition lawmaker who posted a copy of the resolution on Twitter on Tuesday.

The sale was approved at a meeting of the CAF’s board in Buenos Aires on Tuesday, said two opposition lawmakers and a member of a committee named by the opposition to restructure the country’s debt, who warned that the move would jeopardize the crisis-stricken nation’s economic recovery.

“We have learned that the CAF wants to buy shares from Venezuela equivalent to our country’s debt, to clean its balance sheet and wipe out the debt,” Julio Borges, a lawmaker living in exile and serving as opposition leader Juan Guaido’s chief overseas representative, wrote on Twitter earlier on Monday.

In December, Venezuela failed to pay the CAF some $400 million in outstanding debt, prompting rating agencies to downgrade the lender. The OPEC country has been behind on its debt to the Caracas-based CAF since 2017, but the lender rolled over the debt twice.

Angel Alvarado, an opposition lawmaker who serves on the National Assembly’s finance committee and published the resolution on Twitter, said the CAF approved the measure under a program for “exceptional situations” that allows countries to sell shares if there is a payment delay of more than 60 days.

He added that the fund gave six months for the operation to be completed, and that countries including Colombia, Bolivia, Paraguay, Ecuador and Argentina had approved the measure.

Alvarado had argued that instead of allowing Venezuela to sell its shares, the CAF should start restructuring the country’s debt.

The CAF did not immediately respond to a request for comment. Neither Venezuela’s information nor finance ministries immediately responded to requests for comment.

Venezuela has been behind on its debt to the Caracas-based CAF since 2017, but the lender rolled over the debt twice.

Last year, the CAF could not roll over the debt because of U.S. sanctions on Venezuela’s central bank, part of Washington’s efforts to oust socialist President Nicolas Maduro. The United States and dozens of other countries recognize Guaido, chief of the opposition-held congress, as the legitimate president.

Venezuela is undergoing a severe economic crisis marked by hyperinflation, chronic shortages of basic goods, and collapsing public services. The opposition is hoping for significant investments from multilateral development banks like the CAF to rebuild the economy should Maduro leave office.

Reporting by Mayela Armas; writing by Luc Cohen; editing by Bernadette Baum and Richard Pullin

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