IMF and World Bank Provide Emergency Aid to Earthquake-Stricken Venezuela

[Financial News] The International Monetary Fund (IMF) and the World Bank, which restored ties with Venezuela after more than 20 years, have moved to support recovery efforts after a series of powerful earthquakes. Just over two months after the country’s long-standing financial isolation ended this year, the first large-scale assistance from international financial institutions now appears increasingly likely.
On the 25th, local time, the IMF said it was closely monitoring the earthquake damage in Venezuela and working closely with Venezuelan authorities to support disaster recovery. It did not disclose the specific form or scale of assistance, saying a comprehensive assessment of the damage is still under way.
Earlier, Venezuela’s interim president, Delcy Rodríguez, announced that the government would use $200 million in IMF funds for earthquake recovery.
One option under discussion is for Venezuela to withdraw part of the $4.5 billion in special drawing rights (SDR) allocated to the IMF. SDRs are international reserve assets distributed by the IMF to member countries. Unlike conventional bailout programs, they can be used relatively quickly and without separate austerity conditions. The IMF, however, declined to confirm the exact method of fund disbursement.
The World Bank also said it is discussing support measures with the Venezuelan government. It explained that it is reviewing ways to provide technical assistance and disaster relief in cooperation with the international community and aid organizations.
The reason the two major international financial institutions were able to move so quickly is the normalization of relations that took place this year.
The IMF suspended substantive cooperation with Venezuela in 2004, during the presidency of Hugo Chávez, and financial ties were effectively severed amid later political turmoil and disputes over regime change. Formal exchanges resumed in April this year, ending a break of about 22 years.
The World Bank also restarted cooperation in April, after suspending it in 2005. Analysts say the shift in the international community’s stance toward Venezuela provided the institutional basis for this emergency aid.

km@fnnews.com Kim Kyung-min Reporter