The IMF says it will only re-engage with Venezuela if countries holding a majority of IMF voting power recognize a successor government after the U.S. capture of President Nicolás Maduro. Restoring ties would give Venezuela access to roughly $4.9 billion in frozen Special Drawing Rights (SDRs). The U.S. has signalled willingness to convert those SDRs to dollars to aid reconstruction, while IMF officials warn Venezuela's economy is "dire," with triple-digit inflation, a widening fiscal deficit and scarce dollar liquidity.
IMF Says Majority Recognition Required Before Restoring Ties With Venezuela, Which Could Unlock $4.9B in SDRs
International Monetary Fund spokesperson Julie Kozack speaks to reporters at the IMF's headquarters, ahead of the joint IMF-World Bank annual meetings in Marrakech, Morocco taking place on October 9-15, in Washington, U.S. September 28, 2023. REUTERS/Andrea Shalal
WASHINGTON, Jan 15 (Reuters) - The International Monetary Fund said on Thursday that any renewed engagement with Venezuela would depend on whether countries representing a majority of IMF voting power recognize a successor government following the U.S. capture of President Nicolas Maduro.
IMF spokesperson Julie Kozack told a regular briefing that the Fund would follow established protocols used in previous cases of irregular changes of government, assessing whether the governments that together hold a majority of voting rights view Venezuela's new authorities as legitimate.
If the IMF restores relations with Venezuela, the South American oil producer would regain access to about $4.9 billion in Special Drawing Rights (SDRs) held at the Fund. Those SDRs have been unavailable since the IMF suspended dealings with Venezuela in 2019 amid questions about recognition of Maduro's government.
Bessent: Assets Could Help Rebuild Economy
U.S. Treasury Secretary Scott Bessent told Reuters the U.S. would be willing to convert Venezuela's SDR holdings into dollars to support reconstruction efforts as U.S. sanctions are gradually lifted. SDRs are an international reserve asset made up of a basket of currencies, including the U.S. dollar, euro, yen, pound sterling and Chinese yuan.
FILE PHOTO: A view of the International Monetary Fund (IMF) logo at its headquarters in Washington, D.C., U.S., November 24, 2024. REUTERS/Benoit Tessier/File Photo
The IMF's largest shareholder, the United States, has not yet clearly indicated whether it would recognize a successor administration to Maduro. President Donald Trump, who ordered Maduro's January 3 capture in a military operation, was scheduled to meet at the White House with opposition leader María Corina Machado.
Trump has previously described Machado as a "freedom fighter" but has also questioned whether she has sufficient domestic support to lead. A classified CIA assessment presented to Trump judged that Maduro loyalists, including interim President Delcy Rodríguez, were best positioned to preserve stability.
The IMF has not conducted its annual Article IV assessment of Venezuela's economy since 2004, after years of strained relations under Hugo Chávez and Nicolás Maduro. That gap leaves important macroeconomic indicators less frequently vetted by the Fund.
"The economic situation is dire," Kozack said. "Since late 2024, our assessment is that imbalances and vulnerabilities have re-emerged, driven by lower oil revenue, a widening fiscal deficit that has prompted increased monetary financing, and a scarcity of U.S. dollar liquidity. Inflation is estimated to be in the triple digits, and rapid currency depreciation is under way."
(Reporting by David Lawder and Rodrigo Campos; Editing by Rod Nickel)
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