IMF, World Bank say they are resuming dealings with Venezuela

Venezuela says the renewed IMF ties mark a key step for its economy

The International Monetary Fund and the World Bank said on Thursday they had resumed dealings with Venezuela, which had been paused since 2019.

The move paves the way for a full IMF assessment of Venezuela's economy for the first time in some 20 years and could eventually unlock billions of dollars in funding via frozen special drawing rights.

IMF Managing Director Kristalina Georgieva said in a statement that the Fund, guided by the views of a majority of its members, was now dealing with Venezuela's government under the administration of the South American nation's interim President Delcy Rodriguez.

The World Bank Group also issued a statement announcing it was resuming dealings with Venezuela's government under Rodriguez. Its last loan, the statement said, was in 2005.

The resumption of a formal relationship comes after US President Donald Trump's administration in January ousted President Nicolas Maduro in a raid on Caracas. Since then, Washington has been working with Rodriguez and is looking to expand the US presence in Venezuela's oil and mining sectors.

"This is a very important step for the Venezuelan economy," Rodriguez said in a televised address, thanking Trump and US Secretary of State Marco Rubio, as well as others, for their help in normalizing the relationship with the IMF.

Debt Restructuring and Short-Term Funding Hopes

JPMorgan has estimated that Venezuela's special drawing rights, assets that are available to countries with engagement with the IMF, are worth $5 billion.

Investors have bet big on Venezuela's bonds in hopes that the change in government can enable a debt restructuring. Analysts estimate that Venezuela has about $60 billion of defaulted bonds outstanding, but total external debt is pegged at roughly $150 billion to $170 billion.

The IMF last month said it was beginning to re-engage with Venezuela, starting by collecting basic data and assessing the economy after years of gaps. But a full sovereign restructuring is typically underpinned by a new IMF lending programme - and the data that comes with it regarding what level of debt is sustainable for a country.