Today Bloomberg reports that Venezuela has once again dipped into its gold reserves to the tune of $400 million dollars:
Venezuela sold about $400 million in gold despite a growing international push to freeze the country’s assets, according to two people with knowledge of the matter.
The amount, which would equal almost 9 tons, was reflected by a drop in the bank’s total reserves, which fell to $8.6 billion on April 12, according to data provided by the central bank. About $5.1 billion of that is gold…
Venezuela’s central bank, headed by Calixto Ortega, has been operating with what it calls an emergency team of only about 100 workers of about 2,000 since a power outage left its headquarters without running water.
The piece doesn’t speculate why Venezuela is selling gold now but one possibility is raised by the fact that the country is late with a $100 million payment to Russia. From TASS:
Venezuela has not yet made another payment on its $3 bln debt to Russia that was due to be made in March, Deputy Finance Minister Sergei Storchak said on Monday…
At the end of March, crisis-shaken Venezuela was expected to pay over $100 mln on its debt to Russia. In early April, Russia’s First Deputy Minister, Finance Minister Anton Siluanov said that Caracas had the right to transfer the payment within a month.
As I’ve written before, Venezuela is a one-horse economy. The country has really just one export which is oil. The country has some of the largest oil reserves in the world. But when Chavez nationalized the industry he filled the oil industry with cronies who were loyal to him. The result has been a gradual slide in production as people who actually knew what they were doing were forced out. Today, CNN published a story about the current, decrepit state of Venezuela’s oil industry:
A group of oil workers with state oil company PDVSA want to take CNN to look at the nearby Salinas oil field.
“Populism finished all of this. Do you see this! Nothing works anymore,” says Hector Berti, 48, referring to the aging oil infrastructure on the glasslike lake, “the government finished us completely.”
The oil workers say that the money intended to maintain PDVSA’s equipment ended up elsewhere. They point to the thick layer of polluting oil sludge blanketing the shoreline of evidence of neglect…
After decades working for the company Berti says he was fired just a few days ago by the company for speaking out. He and the others-who asked to remain anonymous for fear of reprisal-could be picked up by Venezuelan intelligence for talking to journalists.
It’s not going to get better under current circumstances where even the workers who haven’t been fired say they don’t make enough to feed themselves. And they are better off than many who have no jobs and in some cases, no power and no water. The former head of the chamber of commerce for Maracaibo describes his city this way, “It is like ‘The Walking Dead.'”