Economy: Venezuela will not have access to more than 4000 million from the International Monetary Fund due to the struggle over Maduro’s legitimacy

Madrid, 16 (Europe Press)

Venezuela will not be able to obtain $ 5,000 million (4,170 million euros) in special drawing rights for the International Monetary Fund (IMF) due to a dispute over Nicolás Maduro’s legitimacy as head of the Latin American country.

According to the rules of the fund, Venezuela will be one of the main beneficiaries of the fund’s resources amounting to 650 billion dollars (more than 540 billion euros). The agency’s goal with these funds is to boost global liquidity, as well as help emerging and low-income economies deal with mounting debt from the pandemic.

Financial assistance from the International Monetary Fund would have equaled 81% of the country’s current international reserves, which have been plunged into an economic recession for more than seven years.

However, Venezuela will not be able to access these resources, which most countries would obtain through their central banks if approved by the fund, given that more than 50 countries (including the United States) consider the leader of the opposition, Juan Guaidó, as legitimate. Country leader since 2018.

“The ongoing political crisis in Venezuela has led to a lack of clarity in the international community, as is evident in the membership of the International Monetary Fund, with regard to the official recognition of the government,” said the spokesman for the International Monetary Fund, Jerry Rice, in an interview with “Bloomberg”. He confirms that the Latin country will not be able to access SDRs “until the government is recognized.”

The decision represents yet another setback for the Maduro regime, which is cut off from a global financial network due to US sanctions.

The conflicts in the relationship between Venezuela and the International Monetary Fund go back at least 14 years, when the late former President Hugo Chavez pledged to cut ties with the Washington Organization because, according to him, it only serves US interests.

This lack of relationship between the two has resulted in the agency not conducting an assessment of the Venezuelan economy under Article IV for 14 years, prompting many economists at the Washington-based institution to implement the country’s macroeconomic projections “blindly”. .

Special drawing rights reserves in Venezuela were only $ 12.5 million (10.4 million euros) last month, a figure well below the $ 3.6 billion (3,000 million euros) recorded in 2009 as a result of the global financial crisis, according to International Monetary Fund data.

Currently, more than two-thirds of Venezuela’s international gold reserves are located. The country faces problems obtaining resources through the sale of bullion, due to US sanctions and the struggle over recognition of the country’s legitimate leader.