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Venezuela became the first country to request a $5 billion emergency loan from the International Monetary Fund Tuesday, appealing to an institution it has long vilified.
Dealing with the fallout of coronavirus and its already collapsed oil economy, Venezuela is believed to be the first country to try to tap into the $50 billion in financing the IMF has available to help developing nations fight the virus.
The request came in a letter from President Nicolas Maduro to IMF Managing Director Kristalina Georgieva.
But the U.S., the largest shareholder in the IMF, holds a veto power of the measure. The U.S., along with 50 other countries, no longer recognizes the Maduro regime and has lent support to opposition leader Juan Guaido. The U.S. may not want to assist the Maduro government, which it has accused of stealing billions from its own people.
“The Bolivarian government has been executing different highly comprehensive, strict and exhaustive prevention and control measures,” the letter, dated March 15 and posted on Foreign Minister Jorge Arreaza’s Twitter account Tuesday, stated. “That is why, we come up to your Honorable organism to request your evaluation, regarding the possibility of granting Venezuela a financing facility of USD 5,000 million from the emergency fund of the Rapid Financing Instrument (RFI).”
While the South American nation has just 33 confirmed coronavirus cases, even before the outbreak nearly a quarter of Venezuelans were in need of humanitarian assistance amid inflation and political instability. The country already faces food, water and medicine shortages, which have led to unrest.
In efforts to force out Maduro, the Trump administration enacted severe sanctions, which nearly halved oil production, one of the country’s major exports. Following Saudi Arabia's decision to flood the market to retaliate against Russia’s refusal to go along with a proposed OPEC production cut, Venezuela will now contend with a multiyear low in oil prices.
Just last month, Maduro slammed the IMF as a tool of U.S. imperialism. In the past he has called the IMF a bloodsucking “assassin” responsible for plunging millions of people into poverty across Latin America.
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The rapid financing instrument was set up by the IMF in 2011 as a one-time, short-term loan to help low-income countries absorb the shock of emergencies such as natural disasters. The loans are supposed to be less comprehensive than traditional loans, and Venezuela is requesting the maximum it is allowed to by IMF guidelines.
However, countries with debt levels the IMF deems unsustainable are barred from taking out loans. Venezuela has defaulted on more than $65 billion in bonds and owes billions more to Russia, China and other foreign energy companies.
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For the loan to be approved, the IMF will weigh in on Venezuela’s political conflict. The U.S. and 50 other countries recognize Guaidó as Venezuela's rightful leader after accusing Maduro of fraud in the 2018 elections. While the IMF hasn't recognized Guaidó, like the Inter-American Development Bank does, the Trump administration could lean heavily on the institution to prevent it from releasing fresh funds.
The Associated Press contributed to this report.