Venezuela has secured $20 billion in Chinese loans and financing, President Nicolás Maduro said on Wednesday — a much needed lifeline as the South American nation struggles with a recession and record-high inflation amid plummeting oil prices.
In an interview on VTV television from Beijing, Maduro said the funds would be used for housing and technology projects and energy and infrastructure programs. China’s state-run oil company will also step up its commitment to work in Venezuela’s oil-rich Orinoco belt, he said.
Maduro provided few details about the funds and it was unclear if the $20 billion figure includes an existing $4 billion line of credit due to expire in February.
Because the new financing appears tied to specific projects, “the funds do not necessarily represent freely available cash that the government can use for imports or to make debt payments,” the New York-based Eurasia Group said in a statement.
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Even so, the money is good news for a country that is being rattled by inflation of 64 percent, a contracting economy, shrinking foreign reserves and sporadic food shortages.
Even so, Maduro on Wednesday called the country an “economic power” that has “the capacity to obtain the financing our country needs to guarantee the functioning of our economy and society.”
He also blasted the “international conspiracy” that “tries to make Venezuela look like it’s broke.”
Falling oil prices have hammered the nation, where oil exports represent more than 90 percent of all dollars that come into the country. Venezuelan oil was trading at $47 per barrel on Jan. 2, down from $95 a year ago.
Even before oil prices tanked, however, Venezuela was in trouble. A three-tiered exchange rate system has been swamped by corruption, critics say, and draconian price controls have throttled the private sector.
Despite sitting on the world’s largest oil reserves, Venezuelans have become accustomed to waiting in line for hours in hopes of snagging basic goods, such as cooking oil and toilet paper. Last year was marred by nationwide protests over shortages and deteriorating security.
Beijing has pumped more than $50 billion into Venezuela over the last decade in exchange for oil contracts, making Caracas the largest recipient of Chinese funds in the region.
Maduro’s announcement comes a day before the first ministerial meeting of China and the Community of Latin American and Caribbean States (CELAC), which includes every country in the Americas except the United States and Canada.
The meeting, which will be attended by the leaders of Venezuela, Ecuador, Costa Rica and the Bahamas, as well as cabinet officials from almost every country in the region, will lay out the strategy for China-Latin America cooperation for coming years.