Venezuela rejoins the global financial system as the IMF and World Bank restore ties after a six-year freeze.
The International Monetary Fund (IMF) and the World Bank announced last month that they have resumed formal relations with Venezuela.
Deals between the South American country and the two multilateral institutions were halted in 2019. However, Venezuela’s reintegration into the global financial system is now underway. The US is helping to facilitate the change following Washington’s removal of President Nicolás Maduro in January.
Interim President Delcy Rodríguez announced she has asked IMF Managing Director Kristalina Georgieva for access to $5 billion in special drawing rights (SDRs) that Venezuela holds. This would be used for infrastructure, electricity, and water improvements, Rodríguez said.
Georgieva warned that the path forward will not be easy for Venezuela. The economy contracted by two-thirds in recent years as inflation rose into the triple digits. Achieving macroeconomic and financial stability will be difficult.
The IMF is likely to start with a review of current data, filling in holes in statistics that have not been kept accurately in years.
“We cannot take accurate decisions without the correct data,” Georgieva said at a press conference. Venezuela’s return to the IMF-World Bank fold can help to rebuild statistics, reintegrate the country into the multilaterals’ system of economic monitoring and assistance, and improve management standards, she noted.
The World Bank released its own statement shortly after IMF’s, noting that Venezuela has been a member of the World Bank Group since 1946 and that it took out its last loan from the bank in 2005. Rodríguez was more upbeat in a state television address.
“This is a very important step for the Venezuelan economy,” she said. It has been a great achievement of Venezuelan diplomacy, and I want to thank all the countries and governments that joined in this push for Venezuela’s return to the IMF.”
