Venezuela Congress Defies Courts Over Central Bank Borrowing

  • Ruling allows central bank to seek loans without congress
  • Bank said to be seeking $1 billion to boost flagging reserves

Opposition lawmakers in Venezuela pledged to challenge any attempt by the central bank to borrow money from a regional reserve fund without its permission, defying a Supreme Court ruling and fueling a constitutional conflict in the South American nation.

The central bank must get the legislature’s approval before seeking any loans, opposition deputy Alfonso Marquina told reporters outside Congress on Thursday, a day after the Supreme Court ruled the bank doesn’t need backing from lawmakers to borrow from the Latin American Reserve Fund, or Flar.

“If this government tries to violate the constitution and judicial order of the country, we are obligated, as we are doing today, to warn national and international investors that any agreement not authorized by law is null,” said Marquina, who heads congress’ Finance Committee.

The comments mark another step up in Venezuela’s constitutional crisis. The National Assembly last week voted to strip 13 of 32 Supreme Court judges of their powers and said any decisions the justices participated in would be invalid. They are also moving to reinstate three deputies the court had removed in January. At the same time, the opposition is pushing for a recall referendum on President Nicolas Maduro as they attempt to end more than 17 years of socialist rule.

Last month, Venezuelan daily El Nacional reported the central bank was seeking a $1 billion loan from Flar to boost international reserves, which have fallen to a 13-year low after a slump in oil prices slashed exports. The fund, which has eight members including Colombia and Bolivia, was established to provide support in the case of a balance of payments crisis.

The government has slashed imports in an attempt to save foreign currency, deepening shortages of everything from diapers to cancer medicines and triggering food riots last month.

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