IMF Spring meetings end, no consensus on Venezuela

IMF managing director Christine Lagarde

Washington,  The International Monetary Fund (IMF) executive committee ended its Spring meetings on Saturday without reaching a consensus on the issue of recognising Juan Guaido as President of Venezuela and proceed with a financial rescue programme.

The IMF though made a commitment to act promptly against the global economic slowdown, Efe news reported on Sunday.

At the final press conference of the biannual meeting of the IMF and the World Bank, IMF managing director Christine Lagarde said it was yet to reach an agreement on possible recognition of Guaido.

“At the IMF, we are guided by our membership. It is for our members to indicate which authority they are recognising diplomatically for us to follow through,” Lagarde said. “We are waiting to be guided by our membership. I know it is in process at the moment,”
the IMF chief said.

Lagarde expressed “deep concern” for Venezuela “given the size of the humanitarian crisis and the massive economic crisis the country is in,” but did not directly mention Venezuelan President Nicolas Maduro.

Over 50 countries have recognised Guaido as interim President since he announced that he was taking power last January. But some powerful nations, notably Russia and China, continue to support Maduro.

Lagarde said earlier this week in an interview, once the political crisis is over, Venezuela will need an enormous amount of help to overcome the economic situation, with the contraction estimated for 2019 at 25 per cent and inflation at over 10 million per cent.

Some analysts put at $60 billion the cost of a viable package to stabilise the Venezuelan economy, by the IMF with other institutions.

The global economic growth slowdown was the other big subject of the day, as reflected in the final statement by participants from the 189 IMF member countries. There are “increasing signs that global growth may have peaked,” the committee observed.

“Downside risks to growth forecasts remain high and surveys show an overall weakening in business and consumer confidence,” said the committee, the chief executive unit of the IMF.

Among the risks it cites “trade tensions, policy uncertainty, geopolitical risks,” without specifically mentioning the US-China trade war, or the doubts on Brexit.

“To protect the expansion, we will continue to mitigate risks, enhance resilience and, if necessary, act promptly to shore up growth for the benefit of all,” the officials said.

At a press conference together with Lagarde, the committee Chairman Lesetia Kganyago said “fiscal policy, for example, should remain flexible and growth-friendly, rebuild buffers and strike the right chord between debt sustainability and supporting demand.”

Lagarde also warned about the risks of interfering with the independence of central banks, in response to a question about US President Donald Trump’s constant criticism of the decision taken by the US Federal Reserve Bank to raise interest rates.

“Independence has served them (the central banks) well over the course of time and hopefully will continue to do so,” Lagarde said.