IDB Pushes $2.5B Venezuela Loan Amid Board Doubts

The Inter-American Development Bank (IDB) is working towards approving a significant $2.5 billion loan for Venezuela. IDB President Ilan Goldfajn is spearheading this effort, but he has encountered reservations from some board members. These concerns stem from the lender's requirement for assurances of Venezuela's repayment capability, especially given the absence of concurrent support from other multilateral institutions.

The IDB previously ceased issuing new loans to Venezuela in May 2018, citing the country's failure to meet its payment obligations. Resuming lending requires special approvals, and while not unusual for returning borrowers, certain board members are reportedly uneasy with the swift progression of this particular case.

Currently, Venezuela's arrears to the IDB exceed $2 billion, preventing new loans under the lender's public arrears policy. However, a third-party bridge loan could potentially clear these arrears, a common step for countries re-entering the international financial system.

This proposed loan, intended for Special Development Lending, would necessitate waivers due to its size and Venezuela's lack of a standing program with the International Monetary Fund, both stipulated by IDB rules. Despite the loan amount being smaller than Venezuela's vast debt, it represents a critical step in early-stage recovery financing.