Venezuelan opposition critical of Maduro’s $5 bln IMF plea

Venezuelan opposition critical of Maduro’s $5 bln IMF plea

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Venezuela'a political opposition accused the administration of President Nicolás Maduro on Wednesday for trying to use the request to the International Monetary Fund for $5 billion in emergency aid tied to the deadly novel coronavirus, COVID-19, as a veiled attempt to gain political recognition.

In exclusive interviews with LatinFinance, opposition officials said the plea for money, which the IMF rejected, was also an attempt to shore up dwindling financial resources in a country that was already suffering from hyperinflation, malnutrition and defaulted debt even though it sits on the world's largest crude oil reserves. Reuters first reported the rejection of the loan request.

“Politically speaking, this is a significant action,” said Ángel Alvarado, a congressman in Venezuela's National Assembly and a member of the Finance Committee. “This is a letter of intention after 30 years of disqualifying the IMF. It shows a recognition that their economic model has failed, and that they’ve had to resort to the symbol of capitalism.” 

Members of the opposition do not recognize the results of the 2018 elections that bestowed Mr. Maduro a second term in office. Among the ten IMF member nations with the highest voting power, the United States, Germany, Britain, France, Italy and Brazil do not recognize the Maduro presidency. Instead, they recognize the president of the National Assembly, Juan Guaidó, as Venezuela’s interim president until fair and legitimate presidential elections are organized.

“This is a bold move by Nicolas Maduro, who is taking advantage of the pandemic to obtain an international recognition that he does not have,” Alejandro Grisanti, an economist and board member of the Venezuelan National Assembly’s debt committee, told LatinFinance.

This request was made in the context of a March 4th IMF announcement about the availability of $50 billion worth of financing to address the coronavirus. Of these resources, $10 billion were for rapid-disbursing emergency financing for low-income countries, while the rest could be accessed by emerging markets through the bank’s Rapid Financing Instrument, according to the bank. 

“We would like to express our sympathy for the people of Venezuela during this evolving humanitarian and economic crisis. We are aware of a request from Nicolás Maduro for financing to help address the health and economic impact of the COVID-19 pandemic in Venezuela. Unfortunately, the Fund is not in a position to consider this request," an IMF spokesperson wrote in an email to statement to LatinFinance.

"As we have mentioned before, IMF engagement with member countries is predicated on official government recognition by the international community, as reflected in the IMF’s membership. There is no clarity on recognition at this time,” the email said.

Maduro retweeted a comment written by a loyal follower, William Castillo (@planwac), on Wednesday that sought to put in doubt an Associated Press report of the IMFs rejection of Maduro's request. It also said that such an action from the IMF wouldn't be surprising, calling both the AP and the IMF agencies of imperialism.

Attempts to reach the Maduro administration were unsuccessful. 

“The big issue here is that Maduro is not recognized by the IMF’s leadership,” Alvarado said. “Our position is that the political problem has to be solved before the economic problem can be solved. All we are asking for is free elections in Venezuela, that is our position.” 

Venezuela’s dire economic situation originated in the continuous fall of oil production that began during the oil industry strike in 2003 and the disappearance of much of the private sector in the last 20 years. Economic sanctions and the crash in oil prices to 18 year lows have only compounded Venezuela's economic malaise.

Venezuela’s oil basket is at around $20 per barrel,” said Grisanti. “With production depleted down to approximately 700 to 800 thousand barrels a day, and only 400 thousand to export; that, plus the coronavirus, puts Maduro is a situation that he cannot resolve.”