The International Monetary Fund (IMF) and the World Bank (WB) on April 17 announced the resumption of relations with Venezuela after a long period of interruption.
The International Monetary Fund and the World Bank said they have resumed transactions with Venezuela, which have been suspended since 2019 due to issues related to government recognition. This move creates conditions for the IMF to conduct a comprehensive assessment of the Venezuelan economy for the first time in about 2 decades, while opening up access to large sources of funding from frozen special withdrawal rights.
Ms. Kristalina Georgieva, Managing Director of the IMF, said that the organization is currently working with the Venezuelan government under the direction of Ms. Delcy Rodríguez, based on the views of the majority of member countries.
The World Bank also confirmed the resumption of cooperation with the government led by Ms. Rodríguez, and said that the most recent loan for Venezuela was made in 2005.
The restoration of relations took place after the US campaign in Venezuela. Since then, Washington has cooperated with Ms. Rodríguez and aimed to expand its presence in the oil and mining sectors in Venezuela. The Ministry of Information and the Central Bank of Venezuela have not given immediate responses.
Analysts believe this move could create a premise for debt restructuring and improving short-term capital. JPMorgan estimates Venezuela's special capital withdrawal right value at about 5 billion USD. Investors have increased bets on Venezuelan bonds with the expectation that political changes will help promote the debt settlement process.
It is estimated that Venezuela has about 60 billion USD of defaulted bonds, while total foreign debt ranges from 150 to 170 billion USD. The IMF previously said it had begun re-engagement by collecting basic data and assessing the economy after a long period of interruption. A new lending program from the IMF is often the foundation for the national debt restructuring process, while providing data on sustainable debt levels.
