Citigroup Inc. plans to sell several tons of Venezuelan gold it received as collateral from the Maduro regime to settle the country’s $1.6 billion loan after the deadline to repurchase the precious metal expired earlier this month, reports said Wednesday.
Venezuela was due to repay $1.1 billion of the loan March 11, according to the terms of the 2015 deal with Citigroup’s Citibank, four sources familiar with the matter told Reuters. The remainder of the loan is due next year.
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Citibank now plans to sell the gold, valued at roughly $1.358 billion, to recover the first tranche of the loan, two of the sources told the outlet. The excess $258 million from the sale will be deposited into a U.S. bank account in New York.
The development marks another financial blow to President Nicolas Maduro’s regime. Not only won’t it be able to access the cash in the U.S. account, but it could see it handed over to the transitional government being formed by opposition leader Juan Guaido, Bloomberg reported, citing sources with knowledge of the matter.
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The socialist regime previously faced a financial setback in January when the Bank of England denied Maduro’s request to withdraw $1.2 billion of gold stored there.
A week later, Venezuelan officials reportedly planned to ship 20 tons of gold, worth around $850 million, overseas to protect the country’s hard assets amid international pressure mounting against Maduro to cede power.
The plan was reportedly halted before the gold could be loaded in Caracas onto an airliner from Russia, a major financial backer of Maduro’s presidency, along with Turkey and China. The ultimate destination of the bars was unknown.
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Maduro depleted more than 40 percent of the country’s gold reserves last year in a desperate bid to pay creditors and fund government programs as the nation deals with a crippling economy, a lack of basic necessities for its people and rising inflation under his socialist rule, Bloomberg reported.
All that remains of the central bank's dwindling international reserves is $8.7 billion, most of which is held in physical gold, the outlet reported.
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