MercoPress. South Atlantic News Agency

Venezuela announces formal restructuring of its external debt after nearly a decade in default

The restructuring advances within the framework of the gradual easing of sanctions promoted by Washington following the 3 January military operation

The Venezuelan government on Wednesday announced the formal launch of an “integral and orderly” restructuring of the country's public external debt and that of the state oil company PDVSA, in the most concrete step by acting President Delcy Rodríguez's administration toward financial normalization after nearly a decade in default. The communiqué, issued by the Sectoral Vice Presidency for the Economy, sets as its central objective “to put the economy at the service of the Venezuelan people and free the country from the burden of accumulated debt.”

Venezuela has been in default since 2017 and attributes the non-payment to the sanctions imposed by the United States that same year. The country has accumulated some USD 60 billion in unpaid bonds, while its total external debt, including PDVSA obligations, bilateral loans, and arbitral awards from expropriation cases, stands at between USD 150 and 170 billion, according to estimates collected by the Reuters news agency, which describes it as one of the largest unresolved sovereign defaults in the world. Among the main creditors are distressed-debt funds, known as “vulture funds”; companies holding outstanding arbitral awards such as ConocoPhillips and Crystallex; and bilateral creditors such as China and Russia, which extended loans both to Nicolás Maduro and to Hugo Chávez.

The announcement is part of an accelerated financial reconfiguration. On 5 May, the US Treasury Department issued General License 58, which temporarily authorizes the provision of legal and financial advisory services to Venezuela and PDVSA for a possible restructuring. The license came 20 days after the International Monetary Fund announced the restoration of relations with Caracas after a seven-year rupture, a diplomatic normalization that enables the organization to provide technical and, eventually, financial assistance to the Venezuelan government.

“For too long, the country has been deprived of normal access to financing and its economy lost the capacity to invest in health, electricity, water, education, infrastructure, productive recovery, and the well-being of its population,” the official communiqué states. “This is a responsible, nationalist, and social decision. Its purpose is to rebuild the country's capacity to mobilize financing, attract investment, stabilize the economy, and materially improve the quality of life of every Venezuelan.” The document does not detail concrete mechanisms, deadlines, or designated counterparts for the negotiation, an omission that leaves open the question of how a process of this magnitude will be operationally articulated.

The restructuring advances within the framework of the gradual easing of sanctions promoted by Washington following the 3 January military operation, in which US forces captured Maduro, now facing judicial proceedings in New York. The Trump administration has prioritized unblocking the energy sector, regarded as a strategic axis for ensuring US oil independence from the Persian Gulf.