CARACAS (Reuters) - President Nicolas Maduro said on Wednesday he had secured more than $20 billion in investment from China for Venezuela’s economic, social, and oil-related projects, but was mum on potential new loans for the cash-strapped OPEC member.
It was unclear if part of the announced investments could include new loans, or whether the investments were part of existing oil-for-loans deals between Venezuela and its major creditor China.
“We have wrapped up over $20 billion in investments during the course of this day’s work,” Maduro said in comments from Beijing broadcast on Venezuelan state television after a meeting with Chinese President Xi Jinping.
The socialist government is desperate for financing in the face of a recession, the region’s highest inflation, looming bond payments, shortages of basic goods, and falling oil prices. China has already provided billions of dollars in loans that are repaid through oil and fuel shipments.
“The $20 billion seems to be committed to specific projects, which will likely involve Chinese companies and provide jobs for Chinese workers and markets for Chinese goods,” said Risa Grais-Targow, senior analyst for Latin America with Eurasia Group.
“As a result, the funds do not necessarily represent freely available cash that the government can use for imports or to make debt payments.”
Maduro also said Venezuela was strengthening ties with Chinese banks and that financing for development, the Joint Chinese-Venezuelan fund, the Large Volume fund and “other mechanisms” were set to be approved in the first half of the year, without providing further details.
Venezuela’s conservative opposition interpreted Maduro’s silence on loans to mean he had not secured a new credit line.
“A desperate Maduro went looking for fresh money to import food and what they gave him were promises of investment in ‘projects,’” opposition leader Maria Corina Machado wrote on Twitter.
Separately, Maduro said China would increase its stakes and investments in the Venezuela’s oil sector and the Orinoco oil belt, but did not provide further information on that either.
Urging unity within OPEC and cooperation with non-OPEC nations such as Russia and Mexico, Maduro repeated earlier statements that he believed oil prices would rebound “sooner or later.”
Venezuelan bonds continued tumbling on Wednesday amid concerns that falling oil prices and cash-flow problems will force it to default.
The Global 2027 bond fell 7.915 points to yield 25.019 percent with the Global 2031 falling 1.460 points to yield 29.339 points.
Reporting by Alexandra Ulmer, Corina Pons and Eyanir Chinea; Editing by Grant McCool