China's $5 billion loan for Venezuela

Venezuela's state oil company (PDVSA) said that in the next few months, Venezuela will get a $5 billion loan from China, the money is mainly used in oil pipeline and other engineering projects."We were talking about financing matters, the next few months will come on stage," Orlando Chacin said, exploration and development vice President of Venezuela's state oil company.Wall Street see website once introduced, China is Venezuela’s "benefactor", and is the country's second largest oil importer. Since 2007, China has provided a large number of loans to Venezuela, accumulative total more than $45 billion, Venezuela still has $20 billion in outstanding loans. The money will help oil companies cope with a drop in oil prices.In January this year, the international oil prices fell below $45 a barrel for a time. Relies heavily on oil (96%) export revenues of the Venezuelan economy and finance are in trouble, and facing more and more high risk of default.In march, Venezuela's state oil company (PDVSA), one executive said, China will offer about $10 billion loans to the country in the next few months, half as part of a bilateral agreement on financing, the other half for Venezuela's oil field development.The first batch of loans ($5 billion) has been issued in April, the funds may be part of the agreement. "The money will be used in many engineering projects. Chacin said, most projects lie in Venezuela's oil reserves of Orinoco Belt. Venezuela is seeking to improve Orinoco Belt region’s crude oil output, to offset the influence of other traditional oil production decline, and stimulate the weak economic growth.Venezuela's economy is expected to shrink by 7% this year, and struggling to deal with a drop in oil prices.Caracas economist said Venezuela inflation is expected to more than 150%, at the same time the country will continue to cope with the shortage of basic goods common problems. Because of the recession, inflation, and the shortage of products, Venezuela's foreign exchange reserves this month is at its lowest level in 12 years.