Venezuela's Congress voted on Tuesday to double the amount the government can borrow from China under a deal that lets the Opec nation repay loans with oil, potentially adding to the debt burden taken on under President Hugo Chavez. China has become the single biggest foreign source of financing for Venezuela's socialist government, which is borrowing heavily to fund state spending on welfare and infrastructure projects ahead of an October 7 election.
Tuesday's vote amended a 2008 agreement to let Venezuela borrow as much as $8 billion from the China Development Bank at any given time, twice the original $4 billion. Ruling party lawmakers say the funds are needed for investment in areas such as manufacturing to sustain economic growth that reached 5.6 percent in the first quarter - its fastest rate in almost four years.
"Venezuela is forging a strategy that allows us to guarantee the development of our manufacturing industry so that it's a motor of the economy," said socialist party lawmaker Christian Zerpa. Chavez signed the measure into law soon after, meaning it will come into force on publication in the Official Gazette. Opposition leaders, however, say such deals threaten to leave the country overly indebted.
"This has taken us back to the colonial era," said opposition lawmaker Americo De Grazia. "As a result of this fund, we're putting our future into debt - not just our future but that of our children and grandchildren." Critics point out that state oil company PDVSA already has to send 430,000 barrels per day of crude oil and products to cover its debts with China, which have reached $32 billion. The financing includes three $4 billion loans in addition to a separate $20 billion lending package agreed in 2010.
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