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CAF grants $500M loan to Venezuela, despite strong resistance

Latin American development bank Banco De Desarrollo De América Latina, or CAF, has approved a $500 million credit line to Venezuela, despite attempts by Argentina, Colombia and Brazil to block the loan, La Nación reported.

Unnamed sources within the Argentine government had estimated that 10 of the 19 countries, that jointly own the multilateral lender, had initially opposed the credit line, which was decided in a secret ballot Dec. 14.

However, on Dec. 17, the sources told La Nación that they now calculated that a number of countries had abstained in the vote, resulting in the approval of the loan.

"[CAF Executive President and CEO] Carranza had been lobbying for abstentions and must have obtained them, which tilted the scale ... but we haven't been informed," a government source reportedly said, adding that Argentina would request a clarification on the matter.

When contacted by S&P Global Market Intelligence, CAF referred to a Dec. 14 press release confirming the loan had been granted to Banco Central De Venezuela in order to "mitigate risks" and contribute to "regional economic stability."

Meanwhile, Venezuelan opposition lawmaker Angel Alvarado protested that "with this financing, CAF [was] supporting the dictatorship," Reuters reported.

Argentina, Brazil and Colombia reportedly cited the controversial re-election of President Nicolás Maduro in May 2018 and its dire economic situation for the negative vote.

According to previous reports, Argentina rejected the loan arguing that Venezuela does not offer "a clear picture of how its future commitments with CAF will be addressed," and there was "significant risk of non-payment, given the country's financial situation." In addition, the vote was based on concerns that the loan would drag CAF's ratings down.

Diego Castells contributed to this article.