INTERVIEW-Venezuelan finance minister woos European lenders

Reuters, 06.04.03, 6:59 PM ET By Silene Ramirez

CARACAS, Venezuela, June 4 (Reuters) - Venezuela's Finance Minister Tobias Nobrega is touring Europe this week in a bid to convince official lenders, private banks, and rating agencies that the country's economic outlook is brighter than it seems. "Venezuela is beginning to be seen as a country that, with all its difficulties, has positive prospects in the medium and long term," Nobrega told Reuters in an interview Wednesday by mobile phone from Paris.

After spending two days in France, he was due to fly to the Netherlands Wednesday as part of a tour that includes a stop in London at the end of the week.

"The main purpose was to talk with European (export credit agencies), but we've used the opportunity to hold other meetings and make presentations about the country's financial situation," the minister said.

Venezuela, the world's No. 5 oil exporter, is in a severe recession following a crippling strike by foes of leftist President Hugo Chavez in December and January that disrupted oil exports and slashed government revenues.

The strike, which ended in early February, forced the government to impose strict price and currency controls, which have worsened the recession. The economy shrank by a record 29 percent in the first quarter of 2003.

But Nobrega will be stressing to bankers, investors and government officials that Chavez's government has managed to restore oil production to pre-strike levels of just over 3 million barrels per day. He also points to a recovery in Venezuelan sovereign debt bond values in recent weeks and an improvement in the country risk profile.

Venezuela's share of the benchmark J.P. Morgan Emerging Market Bond Index Plus <11EMJ> rose 1.26 percent Wednesday.

SYMPATHETIC AUDIENCE? But his audience may take some convincing. In a gloomy outlook shared by many private analysts, the International Monetary Fund has predicted the Venezuelan economy will shrink by 17 percent this year.

Chavez and his ministers reject this forecast as too pessimistic. One of the Venezuelan Central Bank directors, Armando Leon, told reporters Wednesday, he believed the economy would contract around 10 percent in 2003.

A finance ministry source mistakenly told Reuters Tuesday that Nobrega was in New York seeking financial help from bankers and investors. Nobrega told Reuters from Paris that a New York trip had been considered but was postponed, and he flew to Europe instead.

Nobrega was seeking to ensure that European export credit agencies did not take the same step as the U.S. Ex-Im Bank, which in April suspended export guarantees for Venezuela, citing the absence of "reasonable" guarantees of payment. The minister said he hoped that the European export guarantee agencies would be "more balanced ... than those on the other side of the Atlantic".

Asked whether he would be discussing new Venezuelan debt issues or seeking fresh financing, Nobrega was non-committal: "This is continual, these are things that you follow and monitor day by day".

In comments in Caracas Wednesday, the Central Bank's Leon said he believed Venezuela could place bonds abroad worth between $1 billion and $1.5 billion before the end of the year.

Nobrega has said in the past that the government wants to ease a heavy concentration of debt payments this year through possible debt swaps, direct credits from banks and financing for specific projects, especially in the strategic oil sector.

Venezuela is due to make debt payments totaling $960 million this month, according to official figures. The country's total external debt stands at $22.3 billion, of which $5 billion in debt payments and service falls due this year. (Additional reporting by Ana Isabel Martinez