Read Thursday, March 27, 2003 10:40AM EST By THE ASSOCIATED PRESS

CARACAS, Venezuela (AP) - Venezuela won't stop paying its foreign debt obligations despite a severe cash crunch stemming from a crippling two-month strike, the finance ministry said.

"Venezuela completely dismisses the possibility of moratorium, halt of payments or forced restructuring of public foreign debt," the ministry said in a statement released late Wednesday. The statement came after President Hugo Chavez announced in a speech to business owners that Venezuela may have to restructure its foreign debt. Chavez did not provide details.

The Finance Ministry said Venezuela planned to propose a voluntary bond swap, among other measures, to deal with the cash crunch. Venezuela's foreign debt amounts to about $23 billion, or 37 percent of its $63 billion economy. The country faces $5 billion in debt payments this year.

Last week, the government swapped maturing local debt worth more than 160 billion bolivars ($100 million) for new bonds with terms of up to two-and-a-half years. Since last year, the government has extended maturities on 3.8 trillion bolivars ($2.4 billion) in local debt, the finance ministry said.

The South American country lost $6 billion during a strike to force Chavez's resignation or early elections. The walkout hobbled the world's fifth-largest oil exporting industry and source of half of public revenue for Venezuela. Tax collection, the source of most of the rest of government income, also fell as thousands of businesses and the stock market closed.

The strike fizzled last month with Chavez solidly in power.

Ali Rodriguez, president of the government oil monopoly, said Thursday oil production reached 3.1 million barrels a day. Exports are 2.8 million barrels a day, Rodriguez told state news agency Venpres. Executives fired from Petroleos de Venezuela SA for leading the strike say output is 2.4 million barrels a day.

Private economists predict gross domestic product could shrink more than 20 percent this year. GDP contracted 9 percent in 2002.

Read More Reuters, 03.27.03, 5:36 PM ET By Ana Isabel Martinez

CARACAS, Venezuela, March 27 (Reuters) - Income from Venezuela's vital oil exports is slowly flowing again into the central bank coffers after a two-month opposition strike battered the petroleum industry and cut revenues to a trickle, a senior bank official said on Thursday. Venezuela's oil income collapsed dramatically during December and January when opposition leaders and dissident state oil workers spearheaded an economic shutdown aimed at ousting leftist President Hugo Chavez. Central bank director Armando Leon told Reuters that state oil firm Petroleos de Venezuela (PDVSA) has transferred on average about $150 million a week to the bank since the start of March. Those transfers this week included an additional $550 million as part of delayed payments. "The flow of payments from PDVSA to the Central Bank has been reactivated. But it is below the level it was before the strike," Leon said in a telephone interview. Leon's comments came amid growing speculation about how far the world's No. 5 oil exporter has managed to restore the flow of its much-needed oil dollars even as it ramped up crude production severely disrupted by the two-month strike. Leon said PDVSA has forecast it will transfer about $200 million to $400 million weekly between April and the middle of May to the central bank. "If that flow is maintained with a combination of optimum prices and volumes, oil export earnings will be around $1 billion a month, which will allow international reserves to increase or stay stable even with impending foreign debt payments," he said. During periods of high oil prices, PDVSA has managed to hand over to the Central Bank on average around $1.2 billion a month or $14.4 billion per year. COLLAPSE OF OIL INCOME Chavez described the opposition strike as a "blow to the economic heart of the nation." The stoppage fizzled by February as many businesses reopened in the face of bankruptcy. Chavez has rebuffed opposition calls for early elections. According to Leon, the central bank only received about $200 million in February from oil exports and in January that income was "very low" because the government had to pay for huge gasoline imports to offset domestic shortages. The government, which has fired more than 16,000 PDVSA employees for taking part in the protest, says it has managed to restore oil production and the exports that account for half of state revenues. Still, Venezuela's oil-reliant economy contracted about 9 percent during 2002 and most analysts forecast that it will continue its downward slide in 2003 because of the lingering aftershocks of the crippling strike. Government officials now put oil production at around 3.1 million barrels per day (bpd) -- similar to levels reported in November before the strike -- and say crude exports have reached around 2.8 million bpd. But former PDVSA workers estimate that oil production is closer to 2.45 million bpd. Analysts have cast doubt on how far Venezuela can reactivate its strike-hit oil sector and say those difficulties will be reflected in its international reserves. Reserves fell dramatically as political instability drove capital out of the country and battered the local bolivar currency's value against the U.S. dollar. That crisis forced the government to close the foreign exchange market from Jan. 22 and later introduce strict currency controls that cut off dollars even to priority sectors such as food, medicine and primary goods. Central Bank reserves stood at $12.94 billion on March 25 compared with $11.24 billion at the end of January. Reserves including the government's FIEM rainy-day savings fund rose from $13.83 billion in January to $14.35 billion on March 25. Before the strike, Central Bank reserves were at $12.49 billion and total reserves were at $15.84 billion. Leon said that a rise in reserves had not been evident because Venezuela had paid $950 million in external public debt obligations during the first quarter of this year. "One must recognize that despite the complicated economic situation there was cash to deal with these obligations. The payments for this year are tough, but they will not be crushing if income is efficiently managed," he said. Leon said that in the second quarter Venezuela must pay around $1.2 billion in external public debt obligations with most concentrated in June when payments total around $800 million. For the second half, those payments total around $2.2 billion, he said.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Thursday, March 27, 2003 By: Patrick J. O'Donoghue

The US Energy Department says Venezuelan oil imports to the USA seem to have returned to normal ... The American Petroleum Institute, on the other hand,  reports market brokers claiming that stocks have fallen from 402,000 to 271,78 Mbs, contradicting an Energy Department estimate of a 3.7 million rise to 273.9 Mbs. 

The US Energy Department report indicates that imports from Venezuela have normalized for the first time since December 6, 2002 when Petroleos de Venezuela(PDVSA) executives & managers decided to use oil production and exports as a political tool to oustthe Chavez Frias administration. 

Venezuela is currently the USA's fifth biggest supplier, moving down two places from third position which it conquered at the beginning of 2002. Imports to the USA are said to be increasing 1 million bpd (9.7 Mbs).

<a href=www.sfgate.com>More Thursday, March 27, 2003
(03-27) 07:23 PST CARACAS, Venezuela (AP) --

Venezuela won't stop paying its foreign debt obligations despite a severe cash crunch stemming from a crippling two-month strike, the finance ministry said.

"Venezuela completely dismisses the possibility of moratorium, halt of payments or forced restructuring of public foreign debt," the ministry said in a statement released late Wednesday.

The statement came after President Hugo Chavez announced in a speech to business owners that Venezuela may have to restructure its foreign debt. Chavez did not provide details.

The Finance Ministry said Venezuela planned to propose a voluntary bond swap, among other measures, to deal with the cash crunch. Venezuela's foreign debt amounts to about $23 billion, or 37 percent of its $63 billion economy. The country faces $5 billion in debt payments this year.

Last week, the government swapped maturing local debt worth more than 160 billion bolivars ($100 million) for new bonds with terms of up to two-and-a-half years. Since last year, the government has extended maturities on 3.8 trillion bolivars ($2.4 billion) in local debt, the finance ministry said.

The South American country lost $6 billion during a strike to force Chavez's resignation or early elections. The walkout hobbled the world's fifth-largest oil exporting industry and source of half of public revenue for Venezuela. Tax collection, the source of most of the rest of government income, also fell as thousands of businesses and the stock market closed.

The strike fizzled last month with Chavez solidly in power.

Ali Rodriguez, president of the government oil monopoly, said Thursday oil production reached 3.1 million barrels a day. Exports are 2.8 million barrels a day, Rodriguez told state news agency Venpres. Executives fired from Petroleos de Venezuela SA for leading the strike say output is 2.4 million barrels a day.

Private economists predict gross domestic product could shrink more than 20 percent this year. GDP contracted 9 percent in 2002.

<a href=news.ft.com>URL By Vincent Boland in New York Published: March 27 2003 1:11 | Last Updated: March 27 2003 1:11

President Hugo Chávez of Venezuela sent a ripple of uncertainty through capital markets on Wednesday with an announcement that he wanted to restructure the country's domestic and foreign debt.

The comment, which was broadcast on television but was not detailed, was initially interpreted by investors to mean that Venezuela could be about to pursue the forced debt swap imposed on investors by Argentina.

Mr Chávez's remark sent Venezuela's debt prices briefly into a slump in New York trading, mainly because of a lack of detail about what he had said. He told an audience of business people that the cost of servicing Venezuela's debt was too heavy for a country with its budgetary and fiscal problems and that the government would take steps to have it restructured.

Debt servicing costs, including repayments, on the debt are estimated at more than $5bn this year. Mr Chávez said this was "too much money for our beaten down budget and our beaten up situation".

Tobias Nobrega, finance minister, later told Reuters that a moratorium on repayments or a forced restructuring were not being considered, but that swap proposals would be put to investors in the next few months. Venezuela would also continue to comply with its debt obligations.

Analysts who watch Venezuela closely said the country's problem  and the chief difference with Argentina's situation  was not the size of its debt burden, which includes $22.4bn in foreign debt and more than $7bn of domestic debt, but a crisis of government revenue.

"The general perception is that Venezuela has a liquidity problem [rather than a debt burden problem]," said Benito Berber, a Venezuela specialist at IDEAglobal, an economics consultancy in New York. "That's where it differs from Argentina."  

Venezuela is struggling in the aftermath of a bitter and prolonged strike aimed at removing the country's populist president from office. The strike shut down oil production, Venezuela's chief export earner. Although production is now back to pre-strike levels, PDVSA, the state oil company, is unable to recover nearly $2bn in receivables.

This has deprived the government of badly needed revenues at a time when it should be able to take advantage of relatively high oil prices and worries over supplies because of the war in Iraq.

Venezuela's creditworthiness rating, while extremely low, is still several notches above default levels, at Caa1 from Moody's Investors Service and CCC+ from Standard & Poor's.