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Venezuela asks loans of wary banks. But foreign lenders insist on keeping some strings

In a policy switch, Venezuela is seeking new loans from private foreign banks. Finance Minister H'ector Hurtado said last month that his country wants $1.5 billion in fresh money from banks before the end of the year, because low oil prices have caused a dollar shortfall.

But bankers said they would provide new funds only if the government pledged gold reserves or future oil income as collateral, something the government apparently doesn't want to do.

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``Venezuela could raise the money tomorrow if the government offered gold or oil as collateral,'' a knowledgeable observer said.

Mr. Hurtado said the new funds would go to shore up foreign reserves, which the government has drawn down to meet balance-of-payments deficits this year and next.

Hurtado said Venezuela will have trouble meeting debt payments this year without the new funds. But he ruled out declaring a debt moratorium, as Peru and Brazil have done.

``We will not take any unilateral action,'' he said. ``We will work together with banks.''

Although Venezuela is Latin America's wealthiest country on a per capita income basis and is in better shape than almost all debtors to repay loans, bankers here say their home offices don't want to lend money without strings to any Latin American country.

``Our stock goes down every time we lend to Latin America,'' one banker said.

At the same time, bankers said they are wary of Venezuela, because they believe the government would misspend the money they lent. They complain that Venezuela has little to show for its $30 billion foreign debt, charging that much of the money was wasted and stolen.

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``Venezuela will need new money,'' said a European banker. ``But the last thing we want to do is lend for balance-of-payments support. We'd just be throwing money into a hole.''

Hurtado declined to say whether Venezuela will seek a renegotiation of the $20.34 billion foreign-debt agreement signed last year. That accord covered nearly all the country's medium-term and long-term foreign bank debt and cut interest charged to seven-eighths of a percentage point over the London interbank offered rate, from the previous 1 point.

But Carlos Andr'es P'erez, the overwhelming favorite to win December's presidential election and take office in February, has called for easier terms.

Bankers, however, say that Venezuela will first have to adopt such unpopular economic measures as unifying its exchange rate, increasing to market levels the domestic interest rates charged to borrowers and savers, and reducing the government's large budget deficit.

Bankers also say Venezuela should first seek new money from the International Monetary Fund and the World Bank before coming to them. Mr. P'erez, however, recently described the IMF as a vehicle for ``economic totalitarianism.''

The government's decision to seek new loans marks a sharp change in policy. Since the international debt crisis hit in 1982, Venezuela has prided itself on being one of the few big debtors that have not sought new funds and have made both interest and principal payments to banks.

But in an economy where oil income provides 87 percent of export income, Venezuela has had to join the three Latin American countries that have bigger foreign debts - Brazil, Mexico, and Argentina - in asking for fresh funds.

Oil income is expected to be about $7.7 billion this year, down from $14.8 billion in 1984.

Hurtado has said the new loans will tide the country over until the early 1990s, when the government expects substantially higher export income from investments currently being made in the state-owned aluminum, petrochemical, and mineral industries.

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