The International Monetary Fund (IMF) announced on Wednesday it will block the Maduro regime in Venezuela from accessing $400 million in funds until a legitimate government is put in place.
According to reports, the IMF suspended the cash-strapped Venezuelan regime’s access to around $400 million of special drawing rights in January, after they recently reduced their total holdings down from $1 billion.
“Any IMF engagement with Venezuela, including responding to potential financial transaction requests, is predicated on the issue of government recognition being clarified,” an IMF spokesman told AFP. “We are guided by our membership on that issue, and at this point, this determination has not been made.”
The international community is currently divided over the issue of recognizing Nicolás Maduro’s socialist regime as legitimate. The majority of Western democracies recognize Juan Guaidó, who took an oath of office in January, as President of Venezuela. However, Maduro still retains the backing of other leftist government in Latin America including Bolivia, Nicaragua, and Cuba, while other authoritarian regimes in Russia, China, Turkey, and Iran also support his leadership.
The move represents another defeat for the Maduro regime, which has desperately attempted to repatriate its foreign assets amid an economic crisis so severe that millions of Venezuelans have been forced to flee the country, often in need of humanitarian assistance. The government has also defaulted on over $10 billion in payments, mainly in the form of loans from China, Russia, and other lenders.
Much of the regime’s difficulty in accessing funds has been a result of U.S. economic sanctions, which ban Americans from dealing with the regime or its state-run companies in any financial capacity. The country currently holds around $6 billion worth of gold, amounting to two-thirds of its total foreign assets, although this has proved almost impossible to liquidate because of U.S. sanctions.
In January, the Bank of England refused to hand over around $1.2 billion of gold from its vaults, citing the regime’s flagrant degradation of democracy, while the U.S. has handed control of various Venezuelan bank accounts to Juan Guaidó and his advisers. One adviser to Guaidó, Harvard Professor Ricardo Hausmann, told Bloomberg that all the necessary funds “will be available when this usurpation ends.”
Venezuela’s socialist regime has long had a contentious relationship with the Washington-based IMF, whose rules state that a government must be recognized by a majority of member countries in order to access their reserves. In 2007, the late socialist dictator Hugo Chávez pledged to cut all ties with the fund, but he never carried through on the plan because of fears it would send the country into default. “They will wear away — the International Monetary Fund, the World Bank and all those institutions,” Chavez said at the time.