Venezuelan finance minister reassures foreign bondholders before country breaks with international lenders.
QUITO, Ecuador (Reuters) -- Venezuela Thursday reiterated it plan to leave the International Monetary Fund and the World Bank, despite investor concerns over a possible technical debt default the withdrawal may trigger.
Venezuelan Finance Minister Rodrigo Cabezas told Reuters in Quito, Ecuador, that he was confident bondholders would not ask for a swift debt payback and said Venezuela would honor all its foreign obligations despite separating from the lenders.
We don't believe that there will be any circumstances that will take us to an acceleration of payments," Cabezas said after a regional meeting of finance ministers.
"There is no possibility that Venezuela will stop paying its foreign obligations," he said.
Venezuelan President Hugo Chávez, who has promised to implement a socialist revolution to counter U.S. influence, this week said he would pull out of the World Bank and IMF, which he blasts as pawns of U.S. imperialism.
The left-wing leader, a former soldier, on Thursday repeated that his country did not need the IMF as he seeks to create an alternative banking cooperation program with like-minded allies in the region.
"The decision of the president has already been announced about the withdrawal from these two multilateral bodies who belong to the capitalism of old," Cabezas said.
But Chávez's government has sought to ease investor jitters that the planned withdrawal could force a technical default as Wall Street banks urge clients to reduce their exposure to Venezuela's sovereign debt.
Clauses covering sovereign deals mean Venezuela's bonds would be in default should it leave the IMF, allowing investors to demand the government pay them back immediately. Cabezas has not said when the withdrawal would take place.
Cabezas declined to specify under what terms Venezuela will pull out of the IMF and if it will keep its membership.
Finance ministers meeting in Quito said a clear blueprint for the creation of a South American multilateral lender named Bank of the South could be announced in late June.
Venezuela hopes a new multilateral institution would substitute for the World Bank and IMF as a source of credit for poor Latin American countries. Brazil also reiterated interest in the bank.
Ecuadorean President Rafael Correa, a leftist and close ally of Chávez, in April expelled the World Bank representative in Quito and has paid off the country's debt with the IMF.
Chávez often berates the multilateral lenders for promoting the U.S.-backed free market system, which he blames for Latin America's high rates of poverty. Allied with Communist Cuba and bolstered by high oil prices, he says he wants to promote regional integration to counter capitalist ideas.
Source : http://money.cnn.com/2007/05/03/news/international/bc.venezuela.imf.reut/?postversion=2007050318
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