[LINK] "Cash-Strapped Latin American Countries Turn to China for Credit"

[rfmcdonald]

The Inter Press Service's Mario Osava notes how, following Angola, many Latin Americans needing credit have turned to China.

[S]everal Latin American countries in financial difficulties have recently turned to China as a sort of lender of last resort. Argentina and Venezuela, for example, lacking access to international credits, obtained large loans from Chinese banks.

For China, it makes no sense to refuse loans to countries with strong agricultural production or that possess plenty of commodities, especially oil and gas. There is no need to be concerned about their solvency if their products guarantee their loans, whatever the reasons for their difficulties.

Brazil’s state oil giant Petrobras announced on Apr. 1 an injection of 3.5 billion dollars from China to relieve its finances, which have suffered from the corruption scandal that has rocked the economy, the government, large companies and several political parties in the country since 2014.

The loan from China Development Bank is helping Petrobras weather a storm that also includes gross management and planning mistakes which raised the cost of constructing two refineries, of the purchase of another plant in the U.S. city of Pasadena, Texas, and of other projects by tens of billions of dollars.

The crises faced by potential Petrobras suppliers provide opportunities for China, but are not seen as indispensable. China Development Bank previously loaned Petrobras 10 billion dollars in 2009, when the oil company appeared prosperous and had recently discovered vast reserves in the pre-salt layer off the Brazilian coast.