Venezuela launches formal restructuring of $150-170 billion external debt after nine-year default

The Sectoral Vice Presidency for the Economy announced on May 13 that Venezuela would pursue comprehensive restructuring of sovereign debt and obligations of state oil company PDVSA. The government attributed the 2017 default to US financial sanctions and stated the restructuring aims to restore financing access and enable public investment in health, infrastructure, and productive recovery. Acting President Delcy Rodríguez’s administration, which took office following the January 3 capture of Nicolás Maduro, has secured US recognition and positioned the debt workout as central to economic normalization.

Total liabilities stand between $150 billion and $170 billion according to Transparencia Venezuela and analyst estimates cited by Reuters. Defaulted sovereign and PDVSA bonds account for approximately $60 billion, with accumulated interest adding roughly $25 billion. Bilateral loans to China and Russia total $15-25 billion, while arbitration awards from Chávez-era expropriations reach approximately $20 billion. Additional supplier claims and infrastructure obligations comprise the remainder. The debt represents 180-200 percent of Venezuela’s 2025 GDP, estimated by the IMF at $82.8 billion, making it the highest debt-to-GDP ratio in Latin America and roughly four times Brazil’s level.

Major creditors include distressed-debt funds, companies holding arbitration awards such as ConocoPhillips and Crystallex, and bilateral lenders China and Russia. Venezuelan bonds rallied following the announcement, with government notes due in 2034 reaching their highest level since 2014 and PDVSA bonds gaining two cents on the dollar according to Bloomberg.

The announcement followed US Treasury issuance of General License 58 on May 5, which permits hiring of legal, financial, and consulting services for restructuring preparation but prohibits direct creditor negotiations, debt settlement, or participation by entities from Russia, Iran, China, North Korea, and Cuba. The authorization came 20 days after the IMF restored formal relations with Caracas on April 16 following a seven-year suspension.

Venezuela plans to present a macroeconomic framework and debt sustainability analysis to the international financial community in June 2026. The government stated restructuring terms would be anchored in rigorous debt sustainability analysis reflecting “actual needs” and requiring “meaningful debt relief.” IMF spokesperson Julie Kozack confirmed regular discussions with Venezuelan authorities have focused on economic data production, a requirement under the Fund’s articles. Caracas has not requested IMF financing, though the institution indicated readiness to support the process. Venezuela now has access to approximately $4.9 billion in Special Drawing Rights following resumed dealings.