Last week, a renowned banker, inquired about my opinion about his proposal of paying cash-and with a predictable 60% discount- the total amount of the foreign debt: “we could pay it and still have money left for development plans” he said. And, calculator at hand, he explained to me how this operation could generate the need for a new focus of the topic by the central countries, many of them unable to honor not only the capital, but also the interests of their foreign debts. But let’s leave the oppositionist banker’s “wild” idea for speculation

The truth is that many people in our country use the mass media to spread comments by some so-called “experts”, the same who have for many years given their approval to the mistaken economic policies of our heads of government, dictated “from the North”.

These “experts” insist on an unbelievable comparison, in disdainful terms, between the handling and evolution of the public debt of the Dominican Republic-amid a massive financial crisis and an acute fiscal problem that the government tried to solve with the cooperation of the international financial markets- and that of Venezuela.

To begin with, public credit in Venezuela is quoted with a risk premium close to 600 basic points, while credit in the Dominican Republic is quoted with a risk premium of around 1,400 basic points. The so-called country risk in Venezuela had improved substantially, from a peak 1,500 points during the oil sabotage -strike, to a point below that of almost all Latin American countries.

Since then, the actions taken by the government have recovered the Venezuela’s credibility and credit risk profile in the international markets.

International financial publications like Euromoney and Latin Finance acknowledged our country as the one that carried out the best refinancing operation in 2003,with the repurchase, by the Ministry of Finance, of 1,500 million $ of the so-called Brady debt.

Many times, desperation and manipulation lead to disrespecting figures and even other countries. The truth is that the evolution of the financial indicators and a thorough, responsible, and balanced analysis, show positive and auspicious realities.

Another fact for these “experts”: Venezuela accepted to repurchase around 928.8 million $ in 6-month term notes to fall due in September, which were part of the denominated investment units (93% of the circulating amount in these papers).This implies an important reduction of the republic’s debt interest costs for the second semester of 2004.

As part of a public debt restructuring plan, Venezuela offered to repurchase at par1,029 million $ of these notes that were on circulation, and had a 1.15% coupon , falling due on September 30th 2004. Last Friday , the value of the repurchase was paid cash.

These papers had been placed in March as part of two emissions of bonds in bolívares and in dollars: one third as a six month term note in dollars, and the rest as two state bonds (Vebonos) in bolívares. Its part in dollars, enabled investors to obtain foreign currency at the official rate. Thus, Venezuela managed to raise 3,240 million $ that it has destined to different restructuring and refinancing operations of its internal short term debt, as part of a program set forth in 2002 with the purpose of extending the term of the public debt and releasing resources for other state plans, according to a report by the British agency Reuters.

Favored by high oil prices, that represent an extra income of about 7 billion $ by year-end, Venezuela has taken advantage of the low yield in dollars and the control of capitals to make foreign debt issues of around 7 billion $ since last August. Half of this amount is being used for exchange and repurchases of internal and external debt.

Aram Aharonian