China has been a key lender to Venezuela since 2008, when it first provided funds for infrastructure and oil projects in the country. Although there’s little public data, China has lent an estimated $70 billion in several installments, most to be paid back in oil, according to Asdrubal Oliveros, director of Ecoanalitica, a consulting firm in Caracas.
“This will give the government some breathing room,” Oliveros said.
Venezuela has been in the throes of a economic meltdown since oil prices collapsed nearly four years ago. Despite the rout, the Maduro administration has largely refused to liberalize a heavily-managed economy even as inflation skyrockets and hunger runs rampant.
A complicated web of price caps and currency controls are widely blamed for the country’s crippling shortages of basic staples and hyperinflation, while the leftist government insists its woes are the result “economic war” waged by the Trump administration and the political opposition.
Last week, a team of Chinese advisers arrived in Caracas as the government unveiled plans to overhaul Venezuela’s 15-year-old currency controls. Zerpa promised the new system would be “free and clear,” but economists remain skeptical that the Maduro administration will be able satisfy dollar demands as creditors circle and the oil industry continues to crumble.
— With assistance by Ben Bartenstein, Fabiola Zerpa, Peter Martin, Andrew Rosati, and Aline Oyamada
