IMF needs voting majority of members to recognise Venezuela government to restore ties
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The IMF has not had any engagement with Venezuela since 2019, due to a lack of recognition of Mr Nicolas Maduro’s government. He was seized by US forces on Jan 3.
PHOTO: REUTERS
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- IMF engagement with Venezuela post-Maduro depends on majority-voting member governments recognising a successor regime.
- No IMF engagement has occurred since 2019 due to the lack of recognition of Mr Maduro’s government.
- Venezuela's economy is "dire" with triple-digit inflation, rapid currency depreciation, and a widening fiscal deficit.
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WASHINGTON - The International Monetary Fund said on Jan 15 that any re-engagement with Venezuela following the US capture of Venezuelan president Nicolas Maduro
IMF spokeswoman Julie Kozack told a regular news briefing that the Fund would follow the same protocols on engagement with other countries that have had irregular regime changes, and assess whether majority-voting countries recognise Venezuela’s government as legitimate.
If the Fund restores ties with Venezuela, the South American oil exporter would have access to about US$4.9 billion (S$6.31 billion) worth of IMF Special Drawing Rights reserve assets.
These have been frozen since the IMF suspended dealings with Venezuela in 2019 over the lack of recognition of Maduro’s government.
Treasury Secretary Scott Bessent told Reuters on Jan 16 the Trump administration would be willing to convert Venezuela’s SDRs to dollars for use in helping rebuild the country’s economy as more sanctions on the country are lifted.
SDRs are comprised of dollars, euros, yen, sterling and yuan.
The IMF’s largest shareholder, the US, has not been clear about recognising a successor to Maduro.
US President Donald Trump, who ordered Maduro’s Jan 3 capture in a daring military raid
Mr Trump has previously called Ms Machado a “freedom fighter” but dismissed the idea of working with her after Maduro’s ousting, saying she did not have enough support within Venezuela.
A classified CIA assessment presented to Mr Trump concluded that Maduro loyalists, including interim President Delcy Rodriguez, were best positioned to maintain stability.
The IMF, shunned by Maduro’s predecessor in Venezuela, Hugo Chavez, has not performed an annual “Article IV” assessment of Venezuela’s economy since 2004.
But Ms Kozack described Venezuela’s economic situation as “dire,” with rising poverty.
“Since late 2024 our assessment is that imbalances and vulnerabilities have re-emerged, driven by lower oil revenue, a widening fiscal deficit, which has prompted increased monetary financing for the fiscal deficit and a scarcity of US dollar liquidity,” Ms Kozack said.
“Inflation is estimated to be in the triple digits, and rapid currency depreciation is under way.” REUTERS
