Venezuela sells gold reserves as economy worsens
CARACAS - Venezuela’s gold reserves have plunged to their lowest level on record after it sold $1.7 billion of the precious metal in the first quarter of the year to repay debts. The country is grappling with an economic crisis that has left it struggling to feed its population.
The Opec member’s gold reserves have dropped almost a third over the past year and it sold over 40 tonnes in February and March, according to IMF data. Gold now makes up almost 70 percent of the country’s total reserves, which fell to a low of $12.1 billion last week.
Venezuela has larger crude reserves than Saudi Arabia but has been hard hit by years of mismanagement and, more recently, depressed prices for oil. Oil accounts for 95 percent of its export earnings. Despite the recent price rebound, declining oil output is likely to take a further toll on the economy.
The IMF forecasts the economy will shrink 8 percent this year, and 4.5 percent in 2017, after a 5.7 percent contraction in 2015. Inflation is forecast to exceed 1,642 percent next year, fueled by printing money to fund a fiscal deficit estimated at about 20 percent of gross domestic product.