Venezuela Sends Gold to Switzerland to Pay Debt As Reserves Dwindle

2
ft-oro-venezuela
Venezuela made a massive shipment of gold bars to Switzerland in January. (La Patilla)

Espa├▒olVenezuela sent USD$1.3 billion worth of gold bars to Switzerland in January in order to pay part of its debt to bondholders, which in February alone amounted to USD$2.3 billion, the Swiss Federal Customs Administration reported.

According to CNN Money, Venezuela is running out of reserves and it is becoming increasingly likely that it will have to default on its debt at some point this year.

Subscribe to our daily newsletter

According to Harvard Professor Ricardo Hausmann and Ricardo Hausmann recently wrote in the PanAm Post that Venezuela has little choice but to restructure its debt, preferably under a new government.

President Nicol├ís Maduro’s government presumably decided to ship Venezuelan gold to Switzerland so that it could be verified and exchanged for cash. Alternatively, the country could also use its gold “as collateral in exchange for a cash loan from banks in what is known as a ‘gold swap,'” CNN Money explains.

 

On February 5, Reuters┬áreported that Venezuela had begun┬á“negotiations with Deutsche Bank AG┬áto carry out gold swaps to improve the liquidity of its foreign reserves.”

Neither of the two sources, however, confirmed the statement.

According to CNN Money,

This shipment is pretty unusual. Gold is traded a lot, but countries usually keep their gold for safekeeping in places like the Federal Reserve Bank’s vault in New York. When they trade gold, it usually goes from one vault to another.

This week, Venezuela revealed that its total reserves had dwindled to USD$ 14.5 billion, the lowest amount since 2003, of which USD$ 10.9 billion are held in gold.

“Experts believe,” CNN Money wrote, that Venezuela “has less than $1 billion in cash reserves.”

Source: CNN Money

Subscribe to our daily newsletter
Sign up here to get the latest news, updates and special reports delivered directly to your inbox.
You can unsubscribe at any time