money

China says Venezuela can ‘appropriately’ handle debt load

People queue to withdraw money from an ATM in Caracas on November 14, 2017. Venezuela has been declared in ‘selective default’ by Standard and Poor's after failing to make interest payments on bond issues. — AFP picPeople queue to withdraw money from an ATM in Caracas on November 14, 2017. Venezuela has been declared in ‘selective default’ by Standard and Poor's after failing to make interest payments on bond issues. — AFP picBEIJING, Nov 15 — China’s Foreign Ministry said today that it believes the Venezuela government and people can appropriately handle their own affairs including the country’s debt.

Venezuela’s cash-strapped government yesterday vowed it was making debt payments responsibly, even as two ratings agencies declared partial default on a crippling debt load that has fuelled hunger and disease.

Despite optimism that payment will continue in the short-term, investors believe the country will at some point be unable to service some US$60 billion in junk bonds — potentially triggering messy lawsuits and worsening an already difficult economic situation.

Chinese Foreign Ministry spokesman Geng Shuang told a regular news briefing that China’s cooperation with Venezuela in all areas, including financing cooperation, was “proceeding normally”.

“We believe the Venezuelan government and people have the ability to appropriately handle their affairs, including the debt issue,” Geng said, without elaborating.

Venezuela has public external debt of about US$150 billion, including US$23 billion owed to China, according to the Washington-based International Institute of Finance, which represents some of the world’s largest banks.

Over a period of years, Venezuela has borrowed billions of dollars from Russia and China, primarily through oil-for-loan deals that have crimped the country’s hard currency revenue by requiring oil shipments to be used to service those loans.

While Venezuela suffers from a harsh economic crisis, President Nicolas Maduro’s government has clamped down on the opposition, jailing or otherwise barring from office many dissenting leaders and activists.

Dozens of people have died in violence since the opposition began a sustained wave of protests in April.

China, a good friend of Venezuela’s, has brushed off widespread condemnation from the United States, Europe and others about the situation in the country.

In September, Chinese Foreign Minister Wang Yi told his Venezuelan counterpart at the United Nations that Beijing believes Caracas can resolve its problems within a legal framework and maintain national stability.

China and oil-rich Venezuela have a close diplomatic and business relationship, especially in energy. — Reuters

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