Venezuela seeks $5bn emergency IMF loan

In an extraordinary departure from decades of political rhetoric, Venezuela's government is requesting a $5bn emergency loan from the International Monetary Fund (IMF) to address the mounting health crisis.

In a 15 March letter made public by the foreign ministry today, the government of President Nicolas Maduro is petitioning the body to tap an emergency fund of the Rapid Financing Instrument (RFI) to help boost coronavirus "detection and response systems."

The IMF has not responded to a request for comment. But the petition would be complicated to fulfill because Venezuela has not cooperated in any consistent manner with the Washington-based agency for years. Nor has the government published or shared credible macroeconomic statistics.

US financial sanctions on the Maduro government, in place since August 2017, would not pose a direct obstacle to IMF support. The IMF, as well as most international organizations including the UN, has tried to steer clear of Venezuela's political dispute, effectively recognizing the Maduro administration. The Washington-based InterAmerican Development Bank (IDB) as well as the Organization of American States (OAS) recognize opposition leader Juan Guaido as interim president, in line with the stance of most Western nations.

Maduro and his late predecessor Hugo Chavez have long reviled the IMF for forcing Venezuela to impose austerity measures, including an ill-fated increase in gasoline prices, in the late 1980s. A backlash to those measures led to Chavez's rise to power a decade later.

Venezuela is considered the most vulnerable country in Latin America to the coronavirus outbreak because of a dilapidated public health system and shortages of basic goods and services. The health crisis is running in parallel to the collapse in oil prices, potentially wiping out Venezuela's national oil company PdV that was already struggling under escalating US oil sanctions since January 2019.

Facing the dual health and economic calamities, Maduro imposed an indefinite national quarantine starting today, in line with the drastic measures other countries are imposing to check contagion. Most flights are grounded.

"This is the most serious situation we have ever faced," Maduro said last night. "The coronavirus has brought an unprecedented economic, financial and oil crisis."

Following a 15 March meeting with senior government officials, Venezuela's pharmaceutical chamber (Cifar) and surgical products suppliers pledged to boost production. But they urged the government to accelerate raw material imports and facilitate distribution.

A senior health ministry official told Argus yesterday that current medicine stocks are only sufficient to meet about 20pc of normal demand. Two-thirds of the 46 public hospitals the government designated as coronavirus treatment centers for patients lack potable water and essential supplies and equipment, including beds. Venezuela also lacks sufficient medical personnel.

Competing to provide succor

Venezuela's US-backed political opposition is now exploring ways to introduce significant aid through alternative channels, including multilateral agencies and non-governmental organizations.

Another tranche of PdV funds frozen in US banks by the sanctions could be released by the US Treasury for this purpose, but finding a way for the Guaido team to channel the aid into Venezuela remains a political and logistical challenge despite the overwhelming need.

NGOs are reluctant to cooperate directly with the opposition for fear of politicizing the aid. And traditional distribution routes would be vulnerable to government seizure and corruption.

In February 2019, Guaido led a failed campaign to bring humanitarian aid into Venezuela from across the border in Colombia. More aid was supposed to come from stockpiles in Brazil and the Dutch Caribbean island of Curacao. The latter was recently forced to dispose of rotting private aid donations after Venezuelan groups stopped paying rent on the storage.

One wildcard is neighboring Colombia, which is among the Western countries that do not recognize Maduro's presidency. Colombia's conservative former president Alvaro Uribe, an outspoken critic of Maduro and political godfather of Colombian president Ivan Duque, today endorsed Colombian cooperation with international organizations to address the health crisis in Venezuela.