Chinese Government provides $10 billion loan for balance of payments support

According to a filing with the U.S. Securities and Exchange Commission, the Chinese Government provided a $10 billion loan to the Government of Venezuela for balance of payments support in March 2015. Under the terms of the agreement, the Government of Venezuela was authorized to repay the loan via deliveries of oil and fuel by PDVSA. In September 2015, the Economist Intelligence Unit reported that ‘Venezuela's external accounts […] have come under growing pressure in recent months on the back of lower oil prices. The Banco Central de Venezuela (the Central Bank) has not published any balance-of-payments data in 2015, so an accurate assessment of the external position is difficult, but a significant fall in international reserves indicates that the current-account surplus has been sharply eroded (potentially even registering a deficit) and that net capital outflows have continued.’ Then, in May 2016, the Chinese Government and the Government of Venezuela reportedly agreed to new commercial conditions for their oil-for-loans program that improved the terms for the Government of Venezuela.

Additional details

1. The China-Latin America Finance Database, which is co-produced by the Inter-American Dialogue and Boston University’s Global Development Policy Center, does not capture this $10 billion loan. 2. The oil-for-loans program between the Chinese Government and the Government of Venezuela involves the provision of debt that is collateralized against PDVSA income from daily oil sales to China National United Oil Corporation (ChinaOil). 3. The funding agency (lender) is not disclosed by any of the underlying sources. However, given that China Development Bank is the principal supplier of oil-backed loans to Venezuela, it is most likely the funding agency. This issue merits further investigation.

Number of official sources

3

Number of total sources

6