LONDON – The International Monetary Fund (IMF) calculates a potential rescue of Venezuela could cost more than $30 billion per year, according to a report in the Financial Times.
Huge sums will likely be required to increase imports, boost consumption and finance the fiscal debt, the FT said.
Discussing a possible bailout, a senior IMF official told the Financial Times, “the market needs to be prepared for this.”
Meanwhile, Douglas Rediker, a former US representative at the IMF, told the newspaper, “This is going to be Argentina meets Greece in terms of complexity.”
Venezuela is experiencing a socioeconomic crisis. Imports to the country have fallen 80% in the last five years, and the IMF has estimated that inflation is set to jump to more than 2,300% in 2018. The country has $140 billion-worth of debt, and the worsening crisis led to a series of protests earlier this year, in opposition to President Nicolás Maduro, in which more than 125 people were killed.
Although the IMF has had no official relationship with Venezuela since the country broke ties with it in 2007, the Fund has been following the crisis closely, and its impact on neighbouring South American countries.
In a report last week, the IMF said Venezuela “remains in a full-blown economic, humanitarian and political crisis with no end in sight.” It said the country’s economy will have shrunk by 35% between 2014 and the end of this year, and is heading towards hyperinflation.
Although the IMF requires an official request for help from governments before intervening, this dialogue between the Fund and the Venezuelan government is reportedly yet to take place.