The Venezuelan government and opposition are nearing an agreement to transfer approximately $4 billion worth of the central bank's gold reserves from the Bank of England to the Federal Reserve Bank of New York. This deal, reported by the Financial Times, would see the interim government of Delcy Rodriguez gain legal control over the gold, though it would not be immediately available for sale.
Instead, the reserves could serve as collateral for government borrowings, particularly for reconstruction following the twin earthquakes in June. These earthquakes contributed to a significant increase in Venezuela's monthly inflation, reaching 19.9% in July from 13.8% in June, with an estimated annual inflation of 575%.
The gold, amounting to about 31 metric tons, has been held by the Bank of England for years due to its non-recognition of Nicolas Maduro's government, stemming from disputed 2018 election results. This refusal dates back to early 2019 when the UK, alongside other nations, backed opposition leader Juan Guaido. The protracted legal dispute over the gold has continued despite recent political changes in Venezuela and a request from acting President Delcy Rodriguez to King Charles.
The proposed deal is being facilitated by US mediation and involves strict oversight mechanisms. The gold would be deposited in accounts at the US Treasury Department, with disbursement subject to audits by international firms and approval from the Treasury and State Departments. This arrangement is designed to ensure transparency and prevent misuse of funds, a key concern given past distrust between the government and opposition regarding state funds. The primary aim is to address immediate needs such as housing, schools, and health centers in earthquake-affected areas.
The agreement marks a rare consensus between the Venezuelan government and opposition, both now seeking to recover these assets. London's willingness to release the assets follows its recognition of Delcy Rodriguez's interim status in March, aligning with Washington's earlier stance. Beyond the gold, Rodriguez's government is also seeking access to $4.6 billion in Special Drawing Rights from the IMF to further address the country's severe economic and social problems.
