China Agrees to Extend $20 Billion Loan to Venezuela

January 8, 2015 Share Print 1

China has agreed to give Venezuela $20bn (£13.2bn) in loans and financing to help it overcome an economic slump exacerbated by plummeting oil prices, the Venezuelan president has announced.

Nicolás Maduro has been in Beijing since Monday to participate in a major meeting between China and the Community of Latin American and Caribbean States (CELAC) – a coalition of 33 countries that was formed in 2011. He announced the $20bn deal after meeting with the Chinese president, Xi Jinping.

The money will be used for housing, technology, energy and infrastructure projects, Maduro told Caracas-based VTV television. “With the China Development Bank and Bank of China we are strengthening a series of financing deals that have been approved on this visit.”

The Venezuelan president did not give further details, and it remains unclear whether the sum represents a fresh arrangement or is part of pre-existing oil-for-loans deals.

Xi said on Thursday China would invest $250bn in Latin American countries over the next decade. The move is part of an attempt by Beijing to boost its influence in a region that tends to look to the US as its largest trading partner.

Beijing has extended $50bn of credit to Venezuela since 2007, mostly in exchange for oil shipments. The country exports about 600,000 barrels of oil to China a day, nearly half of which go towards repaying its loans.

via The Guardian

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Alfonso Esparza

Senior Currency Analyst at Market Pulse

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.