Posted with permission from AFP
Venezuelan President Nicolas Maduro, shown at a press conference in Caracas last month, has insisted his country can pay off its massive debt AFP/File / FEDERICO PARRA

Venezuela was to meet with its creditors on Monday as the oil-rich, cash-poor South American country seeks to stave off a default seen by experts as inevitable, as the EU stepped up the pressure with new sanctions on Caracas.

Talks in both the Venezuelan capital and New York pointed to a day of reckoning for the OPEC-member nation, and a tighter squeeze on its beleaguered socialist President Nicolas Maduro -- who insists he will pay up.

The European Union announced sanctions including an embargo on arms and equipment that could be used for political repression. Washington had already slapped sanctions on Caracas, and labeled Maduro a "dictator."

Given the highly technical world of debt trading, things remained unclear ahead of the Monday afternoon meetings whether Venezuela would be declared to be in default -- or if judgment day would be pushed off again.

The Caracas meeting of foreign bondholders, called to talk over debt refinancing and restructuring Maduro wants, could bring some clarity.

Yet it's not yet clear who will be attending, what possible terms of engagement could be set, or even if a restructuring can be accomplished.

To encourage attendance, Venezuela has reportedly said Vice President Tareck el-Aissami won't physically be there -- despite being put in charge of the restructuring.

The United States has designated him a drug kingpin, with whom American entities are barred from doing business.

- Default inevitable, but when? -

Late Sunday, Maduro struck a defiant tone, insisting in remarks carried on state television that his country would "never" default and pointed to ongoing negotiations with China and Russia.

His aim is to establish a rescheduling of payments of the public part of Venezuela's total debt mountain -- estimated at up to $150 billion, counting sovereign bonds, debt issued by state oil company PDVSA and taken on by the two allied countries.

A default can be declared in several ways: by the major ratings agencies, big debtholders, or by the government itself.

The rating agencies all forecast a Venezuelan default as inevitable, but differ on when it might occur AFP / Anella RETA

A significant step in that direction could come in a meeting of creditors in New York under the International Swaps and Derivatives Association.

Those creditors, represented by 15 financial firms which make up a Determinations Committee, launched talks on Friday and decided to continue discussions on Monday.

The decision before them is whether to declare conditions are met for default insurance -- known as credit default swaps.

The rating agencies all forecast a Venezuelan default as inevitable, but differ on when it might occur. With less than $10 billion in hard currency reserves, though, it cannot be far off.

- Creditors' hopes -

News on Friday that a state-owned utility, Electricidad de Venezuela, failed to make a $650 million payment within a one-month grace period bolstered creditors' wariness that a default was unfolding.

As rough as the ride has been regarding debt, Maduro is also being buffeted by international accusations that he is acting as an autocrat -- stomping on democracy by marginalizing the opposition, which controls the parliament, and stifling independent media.

The United States has imposed successive rounds of sanctions on Venezuela for that reason, most recently last week.

In announcing its own sanctions on Monday, the EU said the new measures were aimed at "underscoring its concerns with the situation in the country."

The EU said it would not recognize Venezuela's Constituent Assembly, a chamber of loyalists appointed by Maduro in August to usurp parliamentary powers, saying its creation had "further eroded the democratic and independent institutions."

Claudio Salerno, Venezuela's ambassador to the EU, said in imposing sanctions, the bloc was "bowing to the call of the head of the empire" -- US President Donald Trump. She added that Venezuela sees itself as a "victim."

Adding to the political pressure against Maduro, the UN Security Council will meet Monday on Venezuela -- talks called by the United States.

"As the Venezuelan economy continues to crumble, the situation will likely only worsen especially as the country is at risk of defaulting on its debt," the US delegation said in a document calling the meeting.