IDB board approves engagement note for Venezuela

On November 13, the Inter-American Development Bank's board unanimously approved a country engagement note for Venezuela, marking the bank's first formal roadmap for operations in the nation since suspending new lending in May 2018. The engagement note outlines the bank's priorities but is not a loan and does not resolve Venezuela's arrears. The note aims to guide operations until a full strategy can be developed.

Venezuela's previous IDB strategy spanned 2011-2014, and per the bank's regulations, any member without a current country strategy is ineligible for new loans and guarantees. The Venezuelan government has yet to comment on the matter. The note prioritizes restoring growth drivers, focusing on reviving the electricity sector, enhancing social services for vulnerable groups—such as social protection and food security—and aiding reconstruction following devastating earthquakes in June.

Earlier this week, Venezuelan lawmakers approved reforms to the country's electricity law, allowing private investment in the power sector after a prolonged state monopoly. As of September 30, Venezuela owed the IDB $2.3 billion in overdue principal and interest, rendering new lending impossible until these arrears are addressed. The bank's guidelines prohibit new lending until the arrears are settled.

Reuters reported in October that Venezuela was contemplating a bridge loan from Qatar to settle the arrears. In September, it was revealed that IDB President Ilan Goldfajn was seeking support for a proposed $2.5 billion loan but encountered opposition from certain board members.