The United States is poised to lift additional sanctions on Venezuela, potentially as soon as next week, according to U.S. Treasury Secretary Scott Bessent. This move aims to facilitate oil sales and support the country’s struggling economy. In an interview with Reuters, Bessent indicated that discussions are ongoing regarding the re-engagement of the International Monetary Fund (IMF) and the World Bank with Venezuela.
During a visit to a facility operated by Winnebago Industries, Bessent highlighted that nearly $5 billion of Venezuela’s frozen IMF Special Drawing Rights (SDRs) could be utilized to aid in the country’s economic recovery. He stated, “We’re de-sanctioning the oil that’s going to be sold.” The Treasury is currently exploring methods to enable the repatriation of oil sale proceeds, which are primarily stored on ships, back to Venezuela.
Bessent emphasized the urgency of restoring financial resources to the Venezuelan government and the broader population. “How can we help that get back into Venezuela, to run the government, run the security services and get it to the Venezuelan people?” he explained. When asked about the timeline for lifting sanctions, he noted, “It could be as soon as next week,” but refrained from specifying which sanctions might be removed.
Context of Sanctions and Economic Rebuilding
These potential sanctions removals are part of the Trump administration’s broader strategy to stabilize Venezuela and encourage the return of U.S. oil producers. This development follows a significant event where U.S. forces apprehended Venezuelan leader Nicolas Maduro in Caracas and transported him to New York to face drug trafficking charges. Current U.S. sanctions restrict international banks and creditors from engaging with the Venezuelan government without a license, complicating a complex $150 billion debt restructuring that is crucial for attracting private capital back into the country.
On the evening of March 15, 2024, President Donald Trump signed an executive order preventing courts or creditors from seizing Venezuelan oil revenue held in U.S. Treasury accounts. This order aims to safeguard these funds for the purpose of fostering “peace, prosperity and stability” in Venezuela.
IMF and World Bank Engagement
Bessent, who oversees the dominant U.S. shareholding in both the IMF and World Bank, confirmed that these institutions had reached out regarding Venezuela. He stated that the U.S. Treasury is open to converting Venezuela’s SDRs into dollars to facilitate the country’s rebuilding efforts. Currently, Venezuela possesses about 3.59 billion SDRs, valued at approximately $4.9 billion based on recent exchange rates, but it lacks access to these funds.
The IMF has not engaged with Venezuela for over two decades, with its last formal economic assessment of the country completed in 2004. Meanwhile, a source familiar with the World Bank’s internal discussions mentioned that the bank is beginning to explore how it could assist Venezuela, drawing parallels to its rapid response in other regions following regime changes.
Bessent expressed optimism that smaller, privately held companies would quickly re-enter Venezuela’s oil sector, even as some major oil companies, such as Exxon Mobil, have exhibited caution due to past nationalizations of their assets. “I think it’s going to be the typical progression where the private companies can move quickly and will come in very quickly,” he remarked. He further noted the role of the U.S. Export-Import Bank in potentially financing ventures within Venezuela’s oil sector, reflecting previously stated views by U.S. Energy Secretary Chris Wright.
As these discussions unfold, the global community will be closely monitoring the implications of sanction adjustments and the potential revitalization of Venezuela’s economy.
