Venezuela’s gold reserves have plunged to their lowest level on record after it sold $1.7bn 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 per cent of the country’s total reserves, which fell to a low of $12.1bn 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 per cent 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 per cent this year, and 4.5 per cent in 2017, after a 5.7 per cent contraction in 2015. Inflation is forecast to exceed 1,642 per cent next year, fuelled by printing money to fund a fiscal deficit estimated at about 17 per cent of gross domestic product. Venezuela began selling its gold reserves in March 2015, according to IMF data. At roughly 367 tonnes, Venezuela has the world’s 16th-biggest gold reserves, according to the World Gold Council. In contrast, China and Russia both added to their gold holdings this year, the data show. Gold prices have risen 15 per cent this year. Last year Venezuela’s central bank swapped part of its gold reserves for $1bn in cash through a complex agreement with Citi.