Reuters has reported that "Venezuela is asking the Bank of England to sell part of the South American nation's gold reserves held in its coffers and send the proceeds to the United Nations to help with the country's coronavirus-fighting efforts."
For some background to the story, Reuters explained that "Venezuela for decades stored gold that makes up part of its central bank reserves in the vaults of foreign financial institutions including the Bank of England, which provides gold custodian services to many developing countries."
The Bank of England has since 2018 refused to transfer the 31 tonnes of gold to the government of President Nicolas Maduro, whom Great Britain has refused to recognize as the country's legitimate leader after his disputed 2018 re-election.
The effort signals that Maduro is desperately seeking financial resources around the world as the country's economy struggles under low oil prices, crippling U.S. sanctions and a paralyzing coronavirus quarantine.
Consulted about the issue, the United Nations Development Programme said it "has been approached recently to explore mechanisms to use existing resources held by the Central Bank of Venezuela in financial institutions outside the country to fund the ongoing efforts to address the ... the COVID-19 pandemic."
- At current market prices, Venezuelan gold on deposit at the Bank of England would be worth around $1.7 billion.
- The Bank of England said it does not comment on individual customer relationships.
- Former U.N. aid chief Jan Egeland on Tuesday called for sanctions on Venezuela and other countries to be lifted and urged the release of Venezuelan funds in banks in Britain, the United States and Portugal.
- Venezuela has lived a six-year economic crisis driven by an collapsing socialist system and a decaying oil industry, driving a mass migration of nearly 5 million people and fueling hyperinflation that has left many unable to obtain basic food.
- Recent tightening of U.S. sanctions meant to oust Maduro have strangled fuel imports, prompting Venezuelans to wait for hours in fuel stations queues or turn to the pricey black market.
- Venezuela as of Tuesday had reported only 329 coronavirus cases and 10 deaths.
Developing nations are to to be the hardest hit by COVID-19. Venezuela is now considered a developing again, but was almost developed until Maduro came into power – Venezuela has been in decline ever since. Should Venezuela flood the market with physical gold, which it is desperately short of, it is unlikely to have a major impact, but worth noting nevertheless. Venezuela's reserves are already at a 75-tear low. Venezuela currently has around 10 tons of gold reserves, but a third of the total is being held by the Bank of England. This is not the first time that Venezuela has asked the BoE to repatriate its gold, it did so last year as well. The BoE refused even after the opposition leader, Juan Guaido, wrote a letter to the Bank of England asking it not to return the gold to Venezuelan coffers.
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