Venezuela's Hugo Chavez seeks $1 billion development loan

Venezuela is seeking a $1 billion loan either from international banks or foreign allies to finance development during a recession in the oil-exporting South American nation of some 30 million people.

President Hugo Chavez said on Friday the money will be distributed via funding for a new body that helps coordinate policy between the central government and state governors.

"Maybe from an allied country, from international banks we could get hold of a loan of at least $1 billion loan for this fund," the socialist leader said.

Despite economic woes that include the highest inflation in Latin America at 5% last month alone, Venezuela has won multi-billion dollar loans from countries such as Japan, China and Russia, often in return for shipments from its vast oil reserves.

China has promised a $20 billion credit for investment in Venezuela this year.

Venezuela's ratio of debt to GDP is not high, but Fitch Ratings said on Friday new laws governing foreign exchange trading could hurt growth prospects and stoke inflation, compromising the governments's ability to service its debt.

Chavez was speaking during a meeting with state governors. Included in the group were opposition leaders on a rare invitation to the presidential palace, Miraflores.

"Welcome, opposition governors. I think the opposition has not entered here since April 12, 2002," he said, referring to a fleeting coup that pushed him from office for a few hours before triumphantly retaking the presidency.

Earlier on Friday, Chavez repeated his usual defiant line that he is "no longer a fool" and will not negotiate with his opponents.