CARACAS, Dec 17 (Reuters) - Latin American development bank CAF said on Monday it has approved a $500 million credit line to Venezuela’s central bank, drawing criticism from opposition lawmakers for financing the government of President Nicolas Maduro amid economic chaos.
The loan will “mitigate liquidity risks and provide macroeconomic support,” Caracas-based CAF Development Bank of Latin America said in a statement. The bank is owned by 19 countries primarily in Latin America and the Caribbean and 13 private banks in the region.
“With this financing, CAF is supporting the dictatorship,” said opposition legislator Angel Alvarado, who has for years warned investment banks of the reputational risk of giving financial support to Maduro’s socialist government.
He said Venezuela would use the $500 million to pay off CAF loans and thereby avoid falling into default with the regional lender, adding that CAF provided the funds because a default by Venezuela would damage its credit rating.
The CAF did not respond to a request for comment.
A year ago, the bank provided a similar loan for $400 million.
Rating agency Standard and Poor’s this year lowered the outlook for CAF’s credit rating to negative from stable on concerns of payments delays by Venezuela.
Loans to Venezuela make up 14 percent of the CAF’s portfolio, according to S&P.
Venezuela this year defaulted on most of its outstanding bonds. A group of creditors has demanded payment on a $1.5 billion Venezuelan bond that is in default, their lawyer said on Monday, kicking off a long-awaited showdown between creditors and the OPEC member.
Venezuela is struggling under hyperinflation and an exodus of citizens seeking to escape hunger and disease.
Maduro says Venezuela, amid sanctions by the European Union and the United States, is victim of an “economic war” led by political adversaries with the help of Washington.
Reporting by Mayela Armas; editing by Grant McCool