Venezuela’s foreign reserves hit by expired $1.7 billion gold swap with Deutsche

Valentina Ruiz Leotaud | October 23, 2017 | 5:33 pm Precious Metals Latin America Gold 
Venezuelan President Nicolás Maduro. Photo from his official Facebook page.

Quoting finance industry sources, opposition legislator Angel Alvarado denounced today that the Venezuelan government of Nicolas Maduro allowed a $1.7 billion gold swap with Germany’s Deutsche Bank AG to lapse.

 


“Maduro allowed gold swap for $1.7 billion with Deutsche to lapse. We lost those ingots because we continue to negotiate in the wrong way!”


The decision to ignore the terms of the deal, Alvarado said, impacts the liquidity of foreign reserves. About 75 per cent of such reserves were held in monetary gold in August. The funds have already been hit by heavy foreign debt payments and low oil prices and are hovering near 21-year lows.

The operation with Deutsche Bank AG involved $1.2 billion in cash given to Venezuela in exchange for putting up $1.7 billion worth of gold in guarantee. The South American country has been doing these kinds of swaps in the past years -as opposed to just selling the gold to gain liquidity- and was supposed to pay back the $1.2 billion by the middle of October to recover the yellow bars.

In an interview with Reuters, Alvarado said that the central bank will receive another $500 million in cash to reflect the difference between the amount of the loan and the value of the guarantee.

The expiration of the agreement with Deutsche happened almost at the same time Venezuela and its state oil company PDVSA had to pay nearly $3.5 billion in debt service, including maturity payments of $2 billion.

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3 Comments

  • Restless Boomers

    Maduro would have been smart to forgo the dollars and hang onto the gold. Now he has neither.

  • Altaf

    If only they can change the way they look at outside world. They have so many advantages but they are refusing to use them stubbornly. They not only have the largest oil reserves in the world but have the type of heavy / extra heavy oil which US wants the most. Easily they can produce 10 million barrels per day for the next 100 years if they allow big players around the world to come in and develop. With a fleet of VLCC super tankers, they can export extra heavy oil to US and on return journey bring in shale oil for blending. If required they can send another 10 million barrels a day of their oil to China, Korea, Japan from friendly Columbian ports (by laying pipelines from Venezuela to Columbia).
    No other nation has such huge advantages of vast oil resources and proximity to ever hungry US markets, even considering Canada. All they need is a democracy, stable governing system which create faith in world class O&G players to come in and play their part.
    If and when they do that the 1.2 billions of gold will be a minute issue.

  • Eric Dexter

    They sorta get hit twice they loose revenue and push new non oil tek while they callapse. They paid a lot of money to own Cuba and take all that ethanol off the market.

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