CARACAS: Venezuela is seeking to repatriate about $550 million in gold bars from the Bank of England because of fears it could be caught up in international sanctions on the country, two sources with direct knowledge of the effort told Reuters.

Venezuela’s hard currency holdings have dwindled as existing US financial sanctions have effectively blocked President Nicolas Maduro’s government from borrowing on international markets.

The Trump administration on Thursday issued a new round of sanctions banning US citizens from having dealings with anyone involved in “corrupt or deceptive” gold sales from Venezuela, as part of efforts to boost pressure on Maduro.

Maduro’s government is seeking to bring 14 tonnes of gold held in the Bank of England back to Venezuela, according to two public officials with direct knowledge of the operation, who asked not to be identified.

The Bank of England has sought to clarify what Venezuela wants to do with the gold, one of the officials said.

Venezuela’s central bank did not respond to a request for comment. The Bank of England declined to comment.

The plan has been held up for nearly two months due to difficulty in obtaining insurance for the shipment, needed to move a large gold cargo, one of the officials said.

“They are still trying to find insurance coverage, because the costs are high,” the official said.

Venezuela is in its fifth year of recession with annual inflation at more than 400,000 per cent, leading to increased incidence of hunger and disease and spurring an exodus of some 2m citizens.

Maduro says his government is victim of an “economic war” led by the opposition and fueled by Washington’s sanctions. His critics blame the country’s state-led economic model, stringent exchange controls and nationalisations of private companies.

Losing the gold would be a significant blow to the country’s finances. Lack of hard currency can create shortages of basic goods ranging from staple foods to drugs and automobile parts.

The amount is equivalent to five times the total hard currency that Venezuela has sold in 2018 via hard currency auctions that are carried out under the country’s 15-year-old exchange control system, according figures compiled by local consultancy Sintesis Financiera.

The government has promised to auction 2 billion euros in foreign exchange over an unspecified time frame, without saying where it plans to obtain those funds.

Published in Dawn, November 6th, 2018