World governments are working on recognizing a Venezuelan government, a key step before international aid can flow into the crisis-stricken country, IMF chief Christine Lagarde said Thursday.
The South American oil-producer is facing an economic and humanitarian crisis that resembles the collapse of a country at war.
But without a recognized government, after Venezuela’s national assembly leader Juan Guaido in late January challenged the legitimacy of embattled leader Nicolas Maduro, the IMF, World Bank and other institutions cannot help with financing.
“We are really very, very concerned about the humanitarian crisis that is unfolding in front of our eyes in Venezuela,” Lagarde said.
“We are waiting to be guided by our membership and I know that it is in process at the moment as we speak from quite a few members. As soon as that happens we will follow through.”
The IMF has had no direct access to events on the ground as the global crisis-lender had not been welcome in Venezuela for about 15 years, she said.
However, “We have done as much preparatory work as we could… in order to be prepared to act as quickly and as swiftly as we can,” Lagarde said.
The IMF estimates that Venezuela’s economy will contract by one-fourth in 2019, and a further 10 per cent in 2020 — a greater collapse than projected in the October 2018, along with unprecedented hyperinflation of 10 million per cent.
She stressed that the international response to the Venezuela crisis — which is facing shortages of food and medicine, power outages, and an exodus of its citizens — would have to be a “multi-pronged effort” by many institutions.
Her comments echoed those of newly-installed World Bank President David Malpass, who also told reporters that the institution’s shareholders would decide when and how to engage with Caracas.
Malpass also said Venezuela was of “deep concern” and was facing a “humanitarian crisis.”
“As far as the political side, we will be guided by the international community and the views of our shareholders,” he added. “This is something that is not chosen by the bank but by the shareholders of the bank.”
The IMF said Wednesday it would have no contact with Caracas, and would not allow the country access to its IMF-held reserves until the international community recognized a government in Caracas.
The United States is among about four dozen countries to recognize Guaido, and Vice President Mike Pence on Wednesday called on the UN to do so as well.
The Organization of American States’ permanent council and the Inter-American Development Bank have recognized Guaido’s representative.