Venezuela`s woes deepen as Citibank shuts teller window

Venezuela`s howling economic woes have worsened.

AFP| Last Updated: Jul 13, 2016, 10:15 AM IST
Venezuela`s woes deepen as Citibank shuts teller window

Caracas: Venezuela`s howling economic woes have worsened as Citibank closed the government`s overseas payments account and multinational firms are packing up and leaving.

The beleaguered government the opposition is trying organize a recall referendum against the president has responded by shifting more power to the military in order to cling to power and avert total collapse.

The army is now in charge of distributing food and other basic goods. Shortages are acute in this South American country blessed with the world`s highest oil reserves but devastated by the drop in world crude prices.

Citibank confirmed Tuesday that after a risk assessment, it has closed the account that the Venezuelan government used to make international payments.

Socialist President Nicolas Maduro likened the move to a financial blockade.

Venezuela used the account to make payments to other accounts in the United States and elsewhere in the world.

Now its economic mess is worse because it will have to find another bank to deal with, so as not to get closed out of the international financial system altogether.

"This adds another problem because it makes external payments harder and complicates overseas transactions for a country that was already in a severe crisis," said opposition lawmaker Jose Guerra, a former central bank governor.

The snub from Citibank is the latest in a string of closures or scaling back of operations of foreign companies operating in Venezuela, such as Coca-Cola, US food giant The Kraft Heinz company, Clorox and airlines Lufthansa, Aeromexico and American Airlines.

The Maduro government made good Monday on a threat to take over the facilities of companies that shut down.

A plant run by US consumer products giant Kimberly-Clark it makes products such Huggies diapers and Scottex toilet paper has been turned over to its workers. 

The company said that it simply could not get ahold of hard currency to buy raw materials in Venezuela.Maduro digested this news with the defiance characteristic of him and his mentor, the late populist president Hugo Chavez.

"Do you think they are going to stop us by putting in place a financial blockade? No, ladies and gentlemen, nobody stops Venezuela! With Citibank or without it, we are moving forward. With Kimberly or without, we are moving," he said Monday night.

But the country`s economic problems are indeed crushing.

An estimated 80 percent of food items, medicines and other basics even soap are in short supply. Inflation hit 180 percent last year and the IMF has forecast it at 720 percent this year.