Venezuela Defaults On Gold Swap -- Bloomberg
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Quoting two people who are said to have direct knowledge of the situation, the news wire reported that the lender took control of the precious metal used as collateral to close out the contract.
The country had signed a financing agreement in 2016 to receive cash from Deutsche bank, putting up 20 tons of gold as collateral, Bloomberg said. The agreement was set to expire in 2021 but was settled early due to missed interest payments, Bloomberg continued, quoting sources who asked not to be named.
Opposition leader Juan Guaido, who has been recognized by the U.S. and more than 50 countries as the legitimate leader of the country, has asked the bank to deposit $120 million in an account that can’t be touched by President Nicolas Maduro. This represents the difference in the price of the gold from when it was acquired until current levels.
Bloomberg reported that this is the second time this year that the Maduro regime has failed to pay on financing agreements. The news service also said the country’s dwindling gold holdings are one of the last resources Maduro has to keep his regime afloat.
The country’s reserves have fallen to a 29-year low of $7.9 million, with Bloomberg reporting that the government “blew through” more than 40% of Venezuela’s reserves last year.