March 3, 2020 / 2:54 PM / a month ago

Venezuela plans to sell shares in CAF development bank to pay debt -opposition

CARACAS, March 3 (Reuters) - Venezuela is planning to sell some of its shares in the CAF Latin American development bank to pay down its debt with the lender, representatives of the South American country’s opposition said.

The sale was expected to be discussed at a meeting of the CAF’s board 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 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.

“I understand the high cost Venezuela’s cessation of payments has caused the CAF, and the risks it loses its credit rating, but the proposed solution to have Venezuela sell its shares is unacceptable,” Alejandro Grisanti, an economist and member of the debt committee, wrote on Twitter.

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.

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 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.

“Venezuela would be off the [CAF’s] board and we would lose a line of credit for the reconstruction of the country,” said Angel Alvarado, a lawmaker who serves on the congress’ finance committee.

Reporting by Mayela Armas Writing by Luc Cohen; Editing by Bernadette Baum

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