Venezuela may repay World Bank, IADB debt in 2006

CARACAS, Venezuela, Dec 27 (Reuters) - Venezuela may repay its debt in full to international institutions such as World Bank and Inter-American Development Bank next year, a senior legislator said.

State news agency ABN quoted Rodrigo Cabezas, president of the National Assembly's finance commission, as saying late on Monday an expected balance of payments surplus of $3 billion this year and $4 billion projected for next year should allow the country to pay all its debt to the lenders.

Venezuela owes around $3 billion to the World Bank, the IADB and the Caracas-based multilateral Andean Development Corp. (CAF), another lender that Venezuela should pay in full, according to Cabezas.

He said there should also be enough resources to refinance domestic debt and repurchase some of the foreign debt.

"I believe that in three years, we may be able to cut our foreign debt by 25 percent," he said. Cabezas said left-wing President Hugo Chavez "is happy with the idea" of paying in full Venezuela's debts to international lenders.

Earlier this month, Argentina and Brazil announced their decisions to pay off their entire debt to the International Monetary Fund -- a move Chavez praised and partly supported by buying Argentine bonds. Venezuela has no IMF debt.

Venezuela's foreign debt is around $28 billion, while the government's domestic debt is about $15 billion.

Economists say Venezuela's willingness to repay its debts and ability to keep bankrolling numerous social projects may be undermined if oil prices slide next year from their near record levels. But Cabezas estimated the price of Venezuela's crude should remain strong at around $50 per barrel.

Venezuela is the world's No. 5 crude exporter and the populist government of President Hugo Chavez has been pouring billions of dollars in oil revenues into projects for the poor.

Also on Tuesday, the finance ministry invited interested investors and capital market operators to present their proposals for financing and refinancing domestic debt instruments in 2006.