CARACAS, Oct 4 (Reuters) - Venezuela in the coming months will begin negotiating a renewal of a $20 billion credit line with China, President Nicolas Maduro told Chinese media, boosting the OPEC nation’s reliance on the Asian giant’s finances.
The two nations have bolstered trade over the last decade and since 2007 have signed loan agreements for some $41 billion that Venezuela repays in oil and fuel.
The two countries will begin discussing a renewal to a financing deal linked to a state-run fund called the Long-term Large Volume Fund, Maduro said in an interview with China’s CCTV rebroadcast late on Thursday by Venezuelan state television.
“We are finalizing another fund, the Large Volume Fund, also called the Long Term Fund, which should be renewed immediately and negotiations should begin at the end of this year or the start of next year,” Maduro said.
He did not provide additional details.
The credit line was originally negotiated in 2010 by the late socialist leader Hugo Chavez, who died of cancer in March.
The fund in 2012 disbursed $1.7 billion and 11.1 billion in Chinese renminbi, totalling around $3.5 billion, on projects in electricity, transportation, industry and agriculture, according to the finance ministry’s annual report.
Maduro during a visit to China last month secured a $5 billion loan through a separate financing arrangement known as the Joint Chinese-Venezuelan Fund, which also involves repayment in oil.
Despite holding the world’s largest oil reserves, Venezuela has faced growing financing needs as a result of heavy spending on social programs and slumping productivity of its domestic industries.
It currently sends some 310,000 barrels per day of oil and fuel to China to repay loans, equivalent to close to 10 percent of the country’s official oil production.
The political opposition accuse the socialist government of “mortgaging” the country’s oil reserves to finance murky state investment mechanisms that do not disclose how much they have received and what they have done with the money.
The government dismisses those accusations as politically motivated criticism, saying the funds have been crucial for infrastructure projects led by Chavez.
But Maduro has acknowledged corruption in the management of the funds, announcing in July that officials and private contractors had been arrested for embezzling $84 million from one of the Chinese-financed funds.