Crystallex International

The Central Bank of Venezuela pawned gold international reserves by nearly $ 1 billion, reported sources close to the central bank. The swap operation, as it is called in the financial markets was signed with the US bank Citibank, which was chosen from a group of 5 international organizations, which also aspired to structure this financial instrument.

Although details of the operation are unknown, experts have estimated that the US bank will charge a fee of between 6% and 7% for preparing the swap. Gold remains in the vaults of the Bank of England. However, it would be taken as collateral in case the BCV not pay on time the amount borrowed by Citibank.

It was considered that the total amount for signing would be 1.5 billion dollars, but in the end was achieved by a lower figure. The funds will be used to pay for imports, said a few weeks ago an unofficial source.

International firms have calculated that in 2015 the fiscal deficit (difference between expenditures and revenues) could reach 25 billion dollars. So far the government has chosen to cover part of this deficit by printing money inorganic (without gold backing) in the Mint, Maracay. The downside of this policy is that it has created an inflationary spiral that according to experts, will inflation at year three digits

Reaction. Although the BCV not formally unveiled the news of the signing of the swap, the information is filtered through international markets and shot bonds of the Republic and PDVSA. This also contributed to the fact that oil prices rebounded in the world market.

On average, Venezuelan titles accelerated between 3% and 4%, a percentage which is important considering that when a bond rises more than 1% in a day is considered a profit out of the ordinary.

Investors who have in their portfolios with papers of the Republic or PDVSA viewed welcomed the signing of the swap, because that way, interpret, the government is solving its foreign exchange deficit by 2015, explained a source close to the financial sector.

In so far this year we have included $ 2.5 billion of debt issued Citgo international reserves. In addition, 2 billion of Chinese Fund and other 1.9 billion for debt restructuring with Dominican Republic joined. And now the swap to an estimated 7.4 billion dollars is added.