US says countries reviewing aid plan for Venezuela

In addition, the representative of Venezuela’s self-declared interim President Juan Guaido presented the group with the economic reform plan to help stabilize the nation’s imploding economy, Mnuchin said.

Guaido in late January challenged the legitimacy of embattled President Nicolas Maduro, and Guaido has been recognized by more than 50 countries.

Mnuchin held a meeting with finance ministers from several Latin American countries — including Mexico which has not formally recognized Guaido — as well as Germany, Japan, Spain and Britain.

Meanwhile, the International Monetary Fund and World Bank have said they cannot begin to dispatch aid to help with the growing humanitarian crisis until the international community formally recognizes a government in Caracas.

The finance ministers group on Thursday “discussed plans for future economic support of Venezuela,” Mnuchin said in a statement, but cautioned that it may require “a long and costly process of rebuilding Venezuela after many years of poor economic policies and kleptocracy.”

Guaido’s economic advisor Ricardo Hausmann also attended, and the officials considered his “economic policy vision to stabilize Venezuela’s financial system, root out public corruption, and spur economic growth.”

The depth of the crisis is staggering. In addition to an exodus of nearly three million Venezuelans since 2015, and recent nationwide power outages, the IMF estimates that Venezuela’s economy will contract by one-fourth in 2019, and a further 10 percent in 2020 — a greater collapse than projected in October, along with unprecedented hyperinflation of 10 million percent.

Mnuchin said the finance ministers discussed steps taken “to increase financial pressure on the Maduro regime” and agreed to support Guaido’s plan to hold new elections to allow a “transition to a legitimate government as soon as possible,” and to restart the private sector.

“We are committed to work with partners to prepare these mechanisms and we are prepared to work with Venezuela to provide technical assistance and capacity building,” Mnuchin said. “The ministers agreed to monitor developments in Venezuela closely.”

– No IMF aid –

The major crisis lenders however cannot engage with Venezuela until there is a clear decision on recognition.

IMF chief Christine Lagarde said the institution has “done as much preparatory work as we could… in order to be prepared to act as quickly and as swiftly as we can,” but is awaiting a decision by the membership.

“We are really very, very concerned about the humanitarian crisis that is unfolding in front of our eyes in Venezuela,” Lagarde said.

The IMF said Wednesday it could have no contact with Caracas, and would not allow the country access to its IMF-held reserves, until the international community recognized a government in Caracas.

The fund has had no direct access to events on the ground as the global crisis-lender had not been welcome in Venezuela for about 15 years.

Her comments echoed those of newly-installed World Bank President David Malpass, who also told reporters that the institution’s shareholders would decide when and how to engage with Caracas.

Vice President Mike Pence on Wednesday called on the United Nations to recognize Guaido. The Organization of American States’ permanent council and the Inter-American Development Bank have recognized Hausmann as Guaido’s representative.