IMF warns Venezuela’s economy and humanitarian situation is ‘quite fragile’ | International Monetary Fund News
IMF Calls Venezuela’s Economic and Humanitarian Situation “Quite Fragile”
The International Monetary Fund (IMF) has characterized Venezuela’s economic and humanitarian conditions as “quite fragile,” citing an estimated triple-digit inflation rate and a rapidly depreciating currency.
During a briefing on Thursday, IMF spokeswoman Julie Kozack noted that the organization is closely monitoring the ongoing situation in Venezuela, although it has had no formal relations with the Venezuelan government since 2019.
Kozack emphasized that any decision to re-engage with Venezuela would depend on input from IMF member countries and the broader international community.
The country’s economic and political crises have prompted significant emigration, with approximately 8 million people—roughly a quarter of Venezuela’s population—leaving since 2014. This mass relocation has created one of the largest displacement crises in recent history.
The Venezuelan economy is currently in a deep structural crisis, experiencing unprecedented volatility and rapid changes in policy following years of hyperinflation and a contraction of its gross domestic product (GDP).
Last month, the U.S. military’s abduction of former President Nicolás Maduro initiated a profound shift in both the political and economic landscape of Venezuela. Maduro remains in U.S. custody on narco-trafficking charges, while interim President Delcy Rodriguez has swiftly implemented plans for stabilization and recovery.
“Venezuela is undergoing a severe and prolonged economic and humanitarian crisis,” Kozack stated. “Socioeconomic conditions remain very difficult, with high levels of poverty and inequality, along with widespread shortages of basic services. The overall situation is quite fragile.”
Current IMF figures indicate that Venezuela’s public debt stands at approximately 180% of its GDP, excluding any court rulings or arbitration payouts related to past defaults.
Kozack mentioned that the IMF is still gathering information to determine the best course of action regarding Venezuela. The organization has not engaged with the country formally in more than 20 years, with its last assessment occurring in 2004. In 2007, Venezuela repaid its final World Bank loan under the late President Hugo Chávez.
Should the IMF re-establish ties with Venezuela, the country would potentially gain access to about $4.9 billion in Special Drawing Rights (SDRs) that were frozen seven years ago when the IMF ceased to recognize Maduro’s leadership. SDRs are reserve assets valued against five major currencies: the U.S. dollar, euro, Chinese renminbi, Japanese yen, and British pound.
U.S. engagement could also impact Venezuela’s economy. Treasury Secretary Scott Bessent indicated last month that the Trump administration would be open to converting Venezuela’s SDRs to U.S. dollars to aid in the country’s economic recovery.
Additionally, the U.S. Department of the Treasury announced last week that it is easing certain sanctions on Venezuela’s energy sector. The Trump administration has heavily focused on the nation’s substantial oil reserves, asserting claims over them due to historical U.S. exploration in the region.
Bessent has also encouraged foreign investment in Venezuela’s oil sector since Maduro’s ousting, including the issuance of two general licenses permitting energy companies such as Chevron, BP, Eni, Shell, and Repsol to conduct further operations in conjunction with Venezuela’s state-owned oil company, PDVSA. The second license allows foreign firms to enter into new investment contracts with PDVSA as well.
