IMF Monitors Venezuela, Iran Tensions But Sees No Major Oil Price Shock Yet

Asked how serious the current tensions surrounding Venezuela and Iran could be for global energy markets, Julie Kozack, Director of the IMF's Communications Department, said: "What I can say for now is that obviously we're monitoring all of this closely."

She added: "We pay close attention to what happens in global energy markets and oil prices in particular."

"Right now, there haven't been very significant impacts on oil prices, but as I said, we'll closely monitor, and we'll look for signs of changes in those markets," Kozack said at the IMF press briefing.

The questions came as Kozack outlined the Fund's assessment of the economic situation in Venezuela and the conditions under which the IMF could resume engagement with Caracas, given the recognition-related pause.

"Since late 2024, our assessment is that imbalances and vulnerabilities have reemerged, driven by lower oil revenues, a widening fiscal deficit," she said, adding that the situation has been shaped by "a scarcity of US dollar liquidity."

She also said: "Inflation is estimated to be in the triple digits, and rapid currency depreciation is underway."

Responding to a question, she said Venezuela's holdings of Special Drawing Rights (SDRs) at the Fund are "equivalent to about $4.9 billion." The country would gain access only when the IMF resumes engagement, which remains paused due to government recognition issues, she noted.

"Since 2019, the IMF's dealings with Venezuela have been paused due to government recognition issues," said Kozack.

"In such cases, the IMF is guided by the views of the international community as represented by a majority of total voting power of the IMF members," she said, adding: "And so, this was the approach that we would follow when deciding or determining to resume our engagement with Venezuela."

Kozack said Venezuela is "undergoing a severe and prolonged economic and humanitarian crisis," and that "since 2014, roughly 8 million people, about a quarter of the country's population, have left the country."

She said "socioeconomic conditions remain dire, characterized by high poverty and high inequality, and widespread shortage of basic services," and that "overall, Venezuela's situation remains deeply fragile, and the humanitarian needs of its people continue to be significant."

"Since late 2024, our assessment is that imbalances and vulnerabilities have reemerged, driven by lower oil revenues, a widening fiscal deficit, which has prompted increased monetary financing for the fiscal deficit, and a scarcity of US dollar liquidity," she said.

"Inflation is estimated to be in the triple digits, and rapid currency depreciation is underway," Kozack said, adding: "Venezuela's public debt is estimated at 180 percent of GDP, and that's before any legal judgments or arbitrations, and the debt is largely in default."

Kozack said the IMF is watching developments despite "very significant information gaps."

"We're obviously closely monitoring developments in Venezuela, despite the fact that we have very significant information gaps," she said.

- IANS