Venezuela to sell $5B in bonds to offset oil drop

CARACAS, Venezuela - President Hugo Chavez's government plans to use bond sales to raise more than $5 billion by September, saying the proceeds will be used to bolster the economy as falling world oil prices shrink its revenues.

The Finance Ministry said Monday that it will issue domestic bonds worth 11 billion bolivars, or $5.1 billion, to be sold between July and September. It didn't say whether the bonds will be denominated in dollars or local bolivars, when they will mature or what interest they will pay.

The ministry's statement said the proceeds would be used to encourage production and "maintain economic growth." Venezuela says the economy grew just 0.3 percent in the first three months of the year, down from a 5 percent rise in the same quarter of 2008.

Chavez relies on oil sales for 93 percent of Venezuela's export revenue and government income has been crimped with world petroleum prices down 52 percent from last July's peak.

Chavez announced in March that Venezuela would sell an additional $10.2 billion in bonds locally this year to cope with the sharp decline in oil income, raising the government's plan for new bond sales this year to $15.8 billion.

The Finance Ministry has not published official figures for Venezuela's total debt sales this year. But in April and June, the government issued $5.5 billion in domestic bonds to finance public spending, Monday's statement said.

The government also approved bond sales worth $1 billion in March to restructure the public debt and $244.5 million to finance public projects.

At the end of last year, the government's domestic debt stood at $14 billion, while its debts to foreigners stood at $29.9 billion, according to the ministry.

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