Wall Street throws Maduro a lifeline
VENEZUELA: As anti-government protests rage across Venezuela, its embattled Left-wing president has received an unexpected lifeline from Goldman Sachs, the Wall Street investment bank.
The bank has bought US$2.8 billion worth of bonds in the beleaguered national oil company PDVSA. The bonds had been held by the Venezuelan central bank, so their sale raised immediate hard cash for the socialist government.
‘‘One of the largest Wall Street firms once again proves that its lack of moral authority and empathy for the people of the world knows no limits,’’ said Ricardo Palm, 29, who has been protesting against the government of President Nicolas Maduro on the streets of the capital, Caracas, for two months.
Goldman Sachs, long seen as emblematic of the global capitalism Maduro claims to despise, is reported to have negotiated to buy the bonds at a heavy discount. The deal would provide Venezuela with an immediate windfall of around US$865 million (NZ$1.23B).
Neither the Venezuelan central bank nor Goldman Sachs has commented on the purchase.
Opposition leaders had urged Wall Street banks not to buy Venezuelan debt, arguing that doing so would prolong the country’s misery, and describing the debt as ‘‘hunger bonds’’.
Julio Borges, president of Venezuela’s opposition-controlled parliament, wrote a public letter to Lloyd Blankfein, chief executive of the investment bank, saying: ‘‘It is apparent Goldman Sachs decided to make a quick buck off the suffering of the Venezuelan people.’’
Venezuela is in the midst of the world’s steepest recession, with inflation expected to pass 2500 per cent next year, according to the International Monetary Fund. To pay its debts, the government has slashed imports. Shortages of food and medicine are widespread, prompting protests that have led to more than 59 deaths since April 1.
According to sources with knowledge of the deal who spoke to The Wall Street Journal, Goldman Sachs is increasing its portfolio of Venezuelan debt on the assumption that Maduro’s government will fall, which would probably lead to the bonds rising in value.
- The Times