January 29, 2019 / 9:32 AM / 5 months ago

Russia expects Venezuela will struggle to repay its debts to Moscow

MOSCOW (Reuters) - Russia expects Venezuela will probably have problems servicing its sovereign debt to Moscow, Russia’s Deputy Finance Minister said on Tuesday, after Washington imposed sweeping sanctions on Venezuela’s state oil firm in a move the Kremlin called illegal.

FILE PHOTO - Russia's Deputy Finance Minister Sergei Storchak (C) arrives at the G20 finance ministers meeting during the Spring Meeting of the International Monetary Fund and World Bank in Washington, April 19, 2013. REUTERS/Yuri Gripas

The Trump administration on Monday imposed restrictions on the PDVSA oil company, aimed at curbing the OPEC member’s crude exports to the United States and at pressuring socialist President Nicolas Maduro to step down.

When asked if the new U.S. sanctions would cause problems for Venezuela when it came to servicing its sovereign debt to Russia, which stands at $3.15 billion, Deputy Finance Minister Sergei Storchak told reporters:

“There will probably be problems. Everything now depends on the army, on the soldiers and how faithful they will be to their duty and oath. It is difficult, impossible to give a different assessment.”

Storchak said the next twice-yearly interest-only payment from Venezuela of over $100 million was due at the end of March and that Caracas had so far not missed any payments. The last time it serviced its debt was on Sept. 30, he said.

The Kremlin on Tuesday condemned the U.S. sanctions as illegal interference in Venezuela’s affairs, while Russia’s Ministry of Foreign Affairs said they looked like an attempt to confiscate Venezuelan state assets.

Russia has accused Washington of trying to usurp power in Venezuela and warned against military intervention.

White House national security adviser John Bolton said on Monday the new measures would cost Maduro $11 billion in lost export proceeds over the next year and block him from accessing PDVSA assets worth $7 billion.

Russia, a close ally of Venezuela, has acted as a lender of last resort for Caracas, with the government and Rosneft handing Venezuela at least $17 billion in loans and credit lines since 2006.

Rosneft, Russia’s biggest oil producer, operates in Venezuela and has issued loans to PDVSA, backed by oil supplies.

Additonal reporting by Tom Balmforth, Ekaterina Golubkova and Christian Lowe, Writing by Andrew Osborn, Editing by William Maclean

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