Venezuela plans to tap some of the reserve assets it holds at the International Monetary Fund (IMF) to finance reconstruction after back-to-back earthquakes hit the country, Bloomberg News reported, citing people familiar with the matter.
The government aims to initially access $200 million from its $4.5 billion allocation of IMF Special Drawing Rights (SDRs), according to the report. It remains unclear whether Caracas will seek to draw on more of its SDR holdings in the near future, the people told Bloomberg News, requesting anonymity because the discussions are private.
Acting President Delcy Rodriguez said on Thursday that Venezuela will create a fund using resources held at the IMF to finance the rebuilding of damaged infrastructure, hospitals and housing. The country declared a state of emergency after two earthquakes struck Yaracuy state, west of Caracas, late on Wednesday.
The SDRs are IMF-created reserve assets allocated to member countries in proportion to their quotas. Unlike conventional IMF lending, accessing SDRs does not require a broader loan programme.
Venezuela's access to its SDR holdings had been suspended for years until April, when the IMF said there was sufficiently broad international recognition of the Rodriguez government, restoring the country's ability to use the funds, Bloomberg News reported.
IMF spokesperson Julie Kozack said on Thursday that the fund is closely engaged with Venezuelan authorities "as they assess the economic impact and the recovery needs." She declined to provide details on the proposed reconstruction fund.
The SDR holdings are part of the IMF's $650 billion allocation made to member countries in late 2021 to bolster global liquidity and help countries cope with the economic fallout from the Covid-19 pandemic, Bloomberg News said.
SDRs are international reserve assets that can be exchanged for five major currencies — the U.S. dollar, euro, Japanese yen, British pound and Chinese yuan. Member countries can hold them as part of their reserves or exchange them for hard currency through voluntary arrangements with other IMF members.
