Venezuela will limit new loans to 50 pctof the interest and principal it repays on its 31 billion dlr
foreign debt, President Jaime Lusinchi told political leaders.
    Speaking last night at a new session of congress, he said
last week's agreement to reschedule 21 billion dlrs in public
sector foreign debt at lower interest rates reflected
Venezuela's improved credit image.
    "Our priority is development, but I insist that there cannot
be development if we don't fulfil our obligations," he said.
    Venezuela agreed last Friday with its 13-bank advisory
committee to lower the interest margin to 7/8 pct over libor
from 1-1/8 and reduce amortisations in the next three years to
1.35 billion dlrs from 3.35 billion.
    "The important thing is that this rate of 7/8 pct is a
marker for new negotiations and will save us 50 mln dlrs this
year," Lusinchi said.
    He said the country had been loyal to the principles of the
Cartagena group of Latin American debtors but had "decided to
reach an agreement convinced that Venezuela is a specal case,
because of the vulnerability of its economy."
    Venezuela signed a 12-1/2 year rescheduling accord in
February, 1986, but immediately sought new terms because of
falling oil income, which dropped 40 pct last year.
    Finance Minister Manuel Azpurua told reporters he hopes to
sign the new rescheduling accord early in the second quarter,
but that in any case it would become effective from April 1.
    Azpurua said Venezuela's 450 or so creditor banks have been
contacted with details of the new agreement, and that Public
Finances Director Jorge Marcano may visit financial centres to
round up support.
    Azpurua said that among the details still to be finalised
were the exact timetable for reprogrammed payments and the
outlines of a government plan to allow public and private
sector debt capitalisation.
    He said banks had shown willingness to consider new loans
to Venezuela, a fundamental achievement in the new accord.
    "Substantial progress has been made in talks and we will now
have to define more precisely what projects can be financed
from foreign borrowing," he said, adding that loans for steel
and aluminium and iron ore sectors could be the first to
materialise.
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