Venezuela has been offered a life preserver by Russia on the edge of a default which would have bankrupted the country’s economy. Through the finance minister of Russia Anton Siluanov, he announced that they had agreed with the South American country to offer them a loan of close to $3 billion. However, compared to the size of Venezuela debt, this is a small amount as the nation owes the world approximately $120 billion. However, the amount will prove crucial to the country, and president Nicolas Maduro as they will be able to pay the millions of dollars that creditors say should be paid before the end of the month. At the same time, the debt will be crucial in assuring bondholders that a default can be avoided. Most of the scramble surrounded the $1.2 billion payment that was supposed to be made on behalf of the national oil company bond over a week ago. This had become a serious issue owing to the fact that the principal of the bond doesn’t have a grace period. As a result, financial analysts and investors were worried that the country would default the loan as they didn’t see a way that the country would raise the money.
With grace periods of most of these bonds coming to an end this month, the government had already withheld interest worth $350 million. Once the Russian government made the announcement, the Venezuelan government began releasing the overdue transfers to the bondholders. Latin America at Eurasia Group director Risa Grais-Targow said that the Venezuelan government had been desperate for a relief and Russia was their best relief at the moment. He further said that the country has been pushing really hard with the Russians and the bet seemed to have paid off. For the third time this year, Russia has opted to bail Venezuela out of a deep financial crisis. At the same time, political experts have said that the money offered by Russia through Rosneft is part of its effort to achieve objectives related to foreign policy. This means that Venezuela has received a total of $10 billion in the last three years from Russia. Other than Venezuela, Rosneft has made similar investments in other countries such as Vietnam, Egypt, China, and Cuba. The Russians are trying to consolidate areas where the United States may have failed. However, the New York Times reported yesterday that the terms of the agreement were not revealed to the public.