Venezuela’s Top Court Rules Central Bank Can Borrow Without Congressional Approval, According to Reuters

CARACAS (Reuters) – Venezuela’s Supreme Court has determined that the central bank is not required to obtain congressional approval for loans from multilateral agencies to support the country’s dwindling international reserves.

This decision allows President Nicolas Maduro’s government to pursue borrowing from the Latin American Reserves Fund, part of the Andean Community, without needing to engage with the opposition-controlled legislature.

Reports indicate that Venezuela is looking to secure a loan of $1 billion from the FLAR to bolster its international reserves, which have plummeted to their lowest levels in nearly 14 years due to falling oil prices and a prolonged economic downturn.

In a ruling announced late Wednesday, the court stated that any loan agreement would be considered an “international agreement” and therefore does not require authorization from the National Assembly.

The Supreme Court has consistently sided with the Maduro administration in clashes with Congress, which was won by the opposition with a significant margin in the elections held in December.

The opposition swiftly condemned the ruling, viewing it as a maneuver by the court to enable Maduro to circumvent legislative approval. Opposition legislator Jose Guerra remarked, “The FLAR argued that Venezuela could not access the loan without the National Assembly’s approval. That’s why they issued this ruling.”

The FLAR has not yet provided a response to the matter, and a representative from the central bank indicated that there was no additional information available.

In previous attempts to strengthen its reserves, the Venezuelan government has drawn from an International Monetary Fund account that contains instruments known as Special Drawing Rights (SDRs). Additionally, it has engaged in gold swaps to improve liquidity amid challenges such as triple-digit inflation and persistent shortages of basic goods.

To date, the Maduro administration has not borrowed from the FLAR, where it reportedly holds deposits amounting to around $500 million, according to financial statements from the central bank.

Severe debt obligations have forced Venezuela to rely on imports for essential goods, leading citizens to endure long lines for food and medicine, while contributing to international reserves falling below $12 billion.