Venezuela’s opposition is reaching out to Wall Street banks to
dissuade them from helping the country monetize its $7.7 billion in gold
reserves.
Venezuela is going to try to stave off default by
seeking to swap its gold reserves into cash, and any investment bank
that helps will be effectively “supporting a government recognized by
the international community as dictatorial,” according to a letter the
opposition-led congress sent Monday to top banks. Lawmakers also
approved a measure today that they say would nullify any government debt
issuance, as well as any debt swaps and pledges of gold as collateral,
not explicitly approved by congress.
“The national government,
through the central bank, is going to try to swap gold held as reserves
for dollars to stay in power unconstitutionally,” according to the
letter signed by National Assembly President
Julio Borges. “I have the
obligation to warn you that by supporting such a gold swap you would be
taking actions favoring a government that’s been recognized as
dictatorial by the international community.”
Venezuelan President Nicolas Maduro has been battling
lawmakers for control over the nation’s finances since the opposition
won control of the National Assembly in December 2015 elections, riding a
wave of anger over triple-digit inflation and chronic shortages of
basic staples. Investors are left trying to gauge the likelihood that
the country will continue servicing its debt amid a dollar shortage
worsened by the collapse in oil prices.
Lawmaker
Angel Alvarado, a
member of the National Assembly’s Finance Committee, said the letter
has gone to banks including Citigroup Inc., Goldman Sachs Group Inc. and
Bank of America Corp.
Venezuela’s central bank said it held $7.7 billion of gold in reserves as of February. The country’s
total foreign reserves stood at $10.26 billion on Monday, near a 15-year low.
