Seoul Gazette - Venezuela, IMF, World Bank restore relations, paving way for investment

Within hours the Venezuelan government confirmed it too would recognize the relationship that has been frozen since 2019.

"Guided by the views of International Monetary Fund members representing a majority of the IMF's total voting power, and consistent with long standing practice, the Managing Director Kristalina Georgieva today announced that the IMF is now dealing with the Government of Venezuela, under the administration of acting President Delcy Rodriguez," the IMF said in a statement.

On Venezuelan state television Thursday night, Rodriguez said: "We are normalizing all processes that involve Venezuela's rights in the organization."

Over recent days, the Fund polled its members on whether they saw Rodriguez as the legitimate leader of Venezuela.

The World Bank quickly followed the Fund in recognizing the Rodriguez government, saying in a statement, "Guided by the outcome of the IMF's polling process, the World Bank Group today announced that it is resuming dealings with the Government of Venezuela, under the administration of acting President Delcy Rodriguez."

Recognition of the Rodriguez government by both institutions paves the way for them to formally begin economic data-gathering, provide technical advice, and to potentially offer financial support to the government, if Venezuela were to ask for it.

Relations between the financial institutions and Venezuela broke down in March 2019 when the Fund recognized the country's opposition -- which controlled parliament -- as the legitimate government of the South American country.

The institutions and Venezuela broke-up financially long before their political divorce.

The last formal assessment of the Venezuelan economy by the IMF was in 2004, and Caracas cleared its World Bank tab in 2007.

- 'As many green lights as possible' -

Rodriguez was the country's vice president until early January, when US forces captured Venezuelan President Nicolas Maduro in a shock overnight operation. Rodriguez was subsequently made interim president.

Since then, Washington has exerted heavy pressure on the country to open its economy to foreign investment -- especially its energy sector.

"Trump frequently and publicly talks about how much he likes Delcy and how closely they're working together," Henry Ziemer at the Center for Strategic and International Studies in Washington told AFP. "But the institutional recognition is, I think, an important next step -- going beyond the personal to the institutional."

"It's important for Delcy's appearance of legitimacy," he said.

Beyond the funds that could now flow from the IMF and the World Bank, the institutional recognition could reassure foreign private investors who were anxious about taking bets on the country.

"I think as many green lights as possible is good, I should say necessary for foreign direct investment to start flowing into Venezuela," Ziemer said, while noting that the security situation was still fragile.

The announcement comes during the week-long IMF-World Bank Spring Meetings that has drawn thousands of government officials, economists, investors and observers to Washington.

Behind the scenes, the US has encouraged greater engagement with Venezuela under Rodriguez.

On Tuesday Washington eased sanctions on the Venezuelan Central Bank, while on the same day US Treasury Secretary Scott Bessent previewed this decision, saying the Fund was "working on bringing Venezuela back in, to make it look more like a normal economy."

Rodriguez, a veteran of the left-wing "Chavista" Venezuelan political movement, is the first woman to sit atop Venezuela's government.

Her position over the long-term is not guaranteed, however.

Last week, Venezuela's opposition called for fresh presidential elections, citing the country's constitution.

F.Kang--SG