Chile Suspends Venezuelan Credit Line and Moves to Collect US $2 Million Owed

The Central Bank of Chile is determined to collect on Venezuela’s State debt, and will resort to “legal measures” if necessary. (BioBioChile)

EspañolChile is the latest country to suspend business dealings with Venezuela, as officials at the Central Bank announced it would be canceling a bilateral credit line due to constant defaults on payments this year.

“This decision was made in light of the repeated breaches incurred by the Central Bank of Venezuela in defaulting on its payments during 2017,” a statement from the Central Bank of Chile said, “and the equity risks that this generated for the Central Bank of Chile.”

The cancellation is just one piece of bad news in what has proven to be a bad financial month for Venezuela and its dictatorship, run by President Nicolás Maduro. The country’s state-owned oil company, PDVSA, continues to struggle to maintain regional trade relationships with countries that no longer trust it to uphold its commercial commitments.

The credit line agreement between Venezuela and Chile dates back to 1989, as part of the Latin American Integration Association (ALADI).

“The progressive deterioration of financial indicators for Venezuela, and the behavior of the Central Bank of Venezuela (BCV) in previous years had already motivated the adoption of other general measures to protect assets of the Central Bank of Chile,” the statement said.

Bank officials also said that the Central Bank of Venezuela has used the credit line in an “intensive” manner they consider unusual. Currently, the country owes Chile more than US $2 million.

To collect that money from Venezuela, Chilean Central Bank officials said they will take “all legal measures within their reach.”

Source: Efecto Cocuyo

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