(Bloomberg) -- The Dominican Republic paid off almost all of a $4.1 billion debt owed to Venezuela for years of oil shipments after raising funds through a bond sale last week, Finance Minister Simon Lizardo said.
With a discount of more than 50 percent, the government used $1.93 billion to pay off 98 percent of its debt to Venezuela, Lizardo told reporters Thursday in Santo Domingo. The deal will immediately reduce its public debt by about 3.3 percent of gross domestic product, Lizardo said, according to the government?s information service.
?In very rare occasions can a country make a transaction of this magnitude,? he said. The agreement, negotiated for more than a year with Petroleos de Venezuela SA, was concluded on Jan. 27, according to the Finance Ministry.
The Dominican government had accumulated the debt under preferential financing afforded to it as a member of Venezuela?s Petrocaribe energy program. Since Petrocaribe was conceived in 2005 by former President Hugo Chavez, Venezuela has sold more than $28 billion in petroleum exports to countries across the Caribbean and Central America. The countries pay for only a portion of the bill upfront and finance the remainder at 1 percent or 2 percent over 25 years.
Falling oil prices and the world?s fastest inflation have put pressure on Venezuelan President Nicolas Maduro?s government to change the program. The Eurasia Group said the revenue from the Dominican Republic plus plans by Citgo Petroleum Corp. to raise as much as $2.5 billion in financing bodes well for the country?s ability to service external debt. Citgo?s parent company is state-run Petroleos de Venezuela SA.
Venezuela Gets $1.9 Billion as Dominican Republic Pays Debt - Bloomberg Business
With a discount of more than 50 percent, the government used $1.93 billion to pay off 98 percent of its debt to Venezuela, Lizardo told reporters Thursday in Santo Domingo. The deal will immediately reduce its public debt by about 3.3 percent of gross domestic product, Lizardo said, according to the government?s information service.
?In very rare occasions can a country make a transaction of this magnitude,? he said. The agreement, negotiated for more than a year with Petroleos de Venezuela SA, was concluded on Jan. 27, according to the Finance Ministry.
The Dominican government had accumulated the debt under preferential financing afforded to it as a member of Venezuela?s Petrocaribe energy program. Since Petrocaribe was conceived in 2005 by former President Hugo Chavez, Venezuela has sold more than $28 billion in petroleum exports to countries across the Caribbean and Central America. The countries pay for only a portion of the bill upfront and finance the remainder at 1 percent or 2 percent over 25 years.
Falling oil prices and the world?s fastest inflation have put pressure on Venezuelan President Nicolas Maduro?s government to change the program. The Eurasia Group said the revenue from the Dominican Republic plus plans by Citgo Petroleum Corp. to raise as much as $2.5 billion in financing bodes well for the country?s ability to service external debt. Citgo?s parent company is state-run Petroleos de Venezuela SA.
Venezuela Gets $1.9 Billion as Dominican Republic Pays Debt - Bloomberg Business