China: Venezuela can handle debt burden
> But investors believe South American country will at some point be unable to service US$60b in junk bonds
BEIJING: China’s Foreign Ministry said yesterday that it believes the Venezuela government and people can appropriately handle their own affairs including the country’s debt.
Venezuela’s cash-strapped government on Tuesday 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 (RM251.4 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 oilfor-loan deals that have crimped the country’s hard currency revenue by requiring oil shipments to be used to service those loans. – Reuters