South American OPEC nation Venezuela will allow Uruguay to pay off a $400 million energy debt at a 35 percent discount, Uruguay said on Monday.

Uruguay will pay Venezuela $262 million to settle the debt, President Tabare Vazquez said after meeting with Venezuelan officials in Montevideo.

Venezuela during the decade-long oil boom allowed allied countries in the region to buy oil on generous financing terms through cooperation agreements, creating billions of dollars in outstanding bills.

Last year’s oil market crash left Caracas scrambling for cash and negotiating deals to write down those debts in exchange for cash up front.

The Dominican Republic in January paid $1.93 billion to settle a $4 billion debt that accrued under the Petrocaribe energy cooperation agreement.

Separately, Uruguay is set to ink a $300 million deal to ship some 265,000 tonnes of grain, dairy products and poultry to Venezuela, potentially helping ease the country’s chronic shortages of consumer staples.

Low oil prices and a decaying state-led economy have pushed Venezuela into recession and left consumers struggling to find goods ranging from milk to flour.

Vazquez said that the countries are expected to sign the agreements on July 17 in Brazil.

 

Source: Reuters