China & Gold May Not Save Venezuela

Venezuela faces a cash crunch, but don’t count on its gold or a third-quarter cash infusion to make up for lost oil revenue. Citi analysts note that Venezuela may tap $5 billion in conditional funds from China in the third quarter, but its more likely the monies will be used for projects that need approval, rather than for Venezuela’s financial needs. Moreover, there’s no guarantee the funding will come in the third quarter. Venezuela has gold reserves it can tap, and oil-sale settlements that will help. But Citi’s Munir Jalil and Esteban Tamayo examined Venezuela’s sources and uses of foreign funds in 2015 and 2016 in order to gauge how the gap between inflows and outflows could potentially affect international reserves. They conclude liquid international reserves will continue to fall this year, while “operations with the country’s gold reserves are almost inevitably needed next year. More…