Fighting to keep Venezuela from sinking further into an economic morass, the country’s top economic official spoke with Reuters on Monday, saying the country had reached another deal with their top lender, China, extending their oil-for-loans deal.
China has been Venezuela’s go-to banker since 2007 when Beijing bankrolled the Hugo Chavez administration until his death in 2013. Now, China is doing the same for Nicolas Maduro with a mix of cash, loans and investment commitments totalling $65 billion, according to a database kept and maintained by Boston University and the Inter−American Dialogue.
China’s banks, the China Development Bank and China Ex-Im Bank, lend to Latin American countries. But Venezuela, Argentina and Ecuador have been the main focus of lending agreements with China because these countries cannot borrow easily on the global market. China looks on these loans as not only being profit-driven but as being a way to create good diplomatic relations.
Venezuela’s Economy Vice-President Miguel Perez told Reuters on Monday that “all” conditions, including loan time-frames, investment amounts and other aspects of the oil-for-loans contracts have been approved. “Today we can say that we’ve agreed to new commercial conditions that are adapted to the country’s reality,” Perez said in an interview in his office at the Industry Ministry, which he also heads. He declined to elaborate.
The Daily Mail is reporting that Chinese officials could not be immediately reached for comment. But when asked earlier on Monday if China was going to give aid to Caracas, a spokesperson for China’s Foreign Ministry said Venezuela’s economic crisis was a domestic matter.
There is still the very real fear the state-run oil company PDVSA could default. But Perez reaffirmed that the $4 billion debt would be honored. The company’s president said it was in talks with international banks over refinancing debt. While Perez is said to be more inclined toward reforms than other socialist party members, it is doubtful if he alone could succeed in turning around the economy, given the dire predicament it is in now.
It is a really big mess right now, and with Venezuela on the brink, it will be worth watching closely to see what happens next. Let’s hope the country doesn’t fall into open rebellion, or worse.
