COVID-19 Latest
World|business|May 26, 2016 / 02:55 PM
Venezuela sells gold reserves as economy worsens

AKIPRESS.COM - Gold1 Venezuela’s gold reserves have plunged to their lowest level on record after it sold $1.7 billion of the precious metal in the first quarter of the year to repay debts. The country is grappling with an economic crisis that has left it struggling to feed its population, according to CNBC.

The OPEC member’s gold reserves have dropped almost a third over the past year and it sold over 40 tons in February and March, according to IMF data. Gold now makes up almost 70 percent of the country’s total reserves, which fell to a low of $12.1 billion last week.

Venezuela has larger crude reserves than Saudi Arabia but has been hard hit by years of mismanagement and, more recently, depressed prices for oil. Oil accounts for 95 percent of its export earnings. Despite the recent price rebound, declining oil output is likely to take a further toll on the economy.

The IMF forecasts the economy will shrink 8 percent this year, and 4.5 percent in 2017, after a 5.7 percent contraction in 2015. Inflation is forecast to exceed 1,642 percent next year, fueled by printing money to fund a fiscal deficit estimated at about 20 percent of gross domestic product.

Venezuela began selling its gold reserves in March 2015. At roughly 367 tons, Venezuela has the world's 16th-biggest gold reserves. In contrast, China and Russia both added to their gold holdings this year, the data show.

Gold prices have risen 15 percent this year. Last year Venezuela's central bank swapped part of its gold reserves for $1 billion in cash through a complex agreement with Citi.

The late president Hugo Chávez had said he would free Venezuela from the "dictatorship of the dollar" and directed the central bank to ditch the U.S. dollar and start amassing gold instead. In 2011, as a safeguard against market instability, Chávez brought most of the gold stored overseas back to Caracas.

The gold swap is another indication the country is desperate for cash. Venezuela and its national oil company PDVSA have some $6 billion to repay in principal and interest payments this year.

All rights reserved

© AKIpress News Agency - 2001-2024.

Republication of any material is prohibited without a written agreement with AKIpress News Agency.

Any citation must be accompanied by a hyperlink to akipress.com.

Our address:

299/5 Chingiz Aitmatov Prosp., Bishkek, the Kyrgyz Republic

e-mail: english@akipress.org, akipressenglish@gmail.com;

Follow us:

Log in


Forgot your password? - recover

Not registered yet? - sign-up

Sign-up

I have an account - log in

Password recovery

I have an account - log in