UAE to purchase Venezuela’s Central bank gold reserves

Venezuela will sell 15 tonnes of gold from central bank vaults to the United Arab Emirates in coming days in return for euros in cash, as the crisis-stricken country seeks to stay solvent, a report by Reuters informs.

The sale this year of gold reserves that back the bolivar currency began with a shipment of 3 tonnes of gold on 26 January, 2019. Last year,  Venezuela had exported mostly unrefined gold worth $900 million to Turkey.

The 3-tonne shipment that left Maiquetia airport on Jan. 26 was transported on small Venezuelan cargo airline Solar Cargo to the United Arab Emirates. The same airline will be used to ship another 26 tonnes by the end of February, according to Reuters news report.

In total, the plan is to sell 29 tonnes of gold held in Caracas to the United Arab Emirates by February in order to provide liquidity for imports of basic goods. Buyers in the United Arab Emirates pay Venezuela with cash in euros for the gold.

Socialist President Nicolas Maduro is under intense pressure to step down, with Venezuela in deep economic crisis and the government facing widespread international condemnation for elections last year seen as fraudulent.

The United States, which is backing an attempt by the opposition to oust Maduro and call new elections, warned bankers and traders on January 30 not to deal in Venezuelan gold.

The Reuters news report says that Republican US Senator Marco Rubio sent a tweet to the United Arab Emirates embassy in Washington on Thursday warning that anybody transporting Venezuelan gold would be subject to U.S. sanctions.

Venezuela had gold reserves of 132 tonnes between the central bank’s vaults and the Bank of England till November, 2018, according to central bank data.

Maduro’s government resorted to selling off gold about a year ago after falling oil production, the country’s wider economic collapse and mounting U.S. sanctions hit public income and made it hard for the country to access credit.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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