Venezuelan authorities are weighing the option of securing a bridge loan from Qatar to cover more than $2 billion in arrears to the Inter-American Development Bank (IDB), six people with direct knowledge of the discussions said. Clearing those missed payments would be a prerequisite for Venezuela to regain access to new financing from the multilateral lender, the people said.
The country has pressing financing needs to restore its power generation and infrastructure after years of underinvestment and poor upkeep, the sources said. At the same time, Venezuela has been in default on much of its external debt for nearly a decade, a condition that has effectively sidelined it from international financial markets. Additional complications stem from U.S. financial sanctions, which impose further constraints on transactions.
The IDB stopped issuing new loans to Venezuela in May 2018 when Caracas slipped behind on scheduled payments. In recent weeks, with apparent U.S. support, Venezuelan officials have discussed approaching Qatar to obtain a short-term loan that would allow them to clear the outstanding balance to the IDB. Several people said that once arrears are settled and the IDB approves an initial disbursement, that financing could be used to reimburse Qatar, enabling Caracas to maintain access to IDB lending lines.
The IDB declined to comment. Venezuela's Ministry of Communication and the U.S. Department of the Treasury did not respond to requests for comment. Qatar's Ministry of Foreign Affairs did not immediately reply to a request for confirmation and comment.
Last month the IDB said it was preparing a two-year engagement plan for Venezuela that would focus in part on electricity and social protections. Reuters subsequently reported that the IDB president was seeking board approval for a $2.5 billion loan to Venezuela, but that proposal had met resistance from some members of the institution's board of directors.
Separately, Venezuela's National Assembly is considering a reform that would open the electricity sector to foreign investors after nearly two decades of state control, a move that could affect how reconstruction projects are financed and executed.
Two of the people familiar with the discussions said the United States has proposed that the IDB take a role in assisting the recovery of Venezuela's troubled power sector, which faces challenges in both generation and distribution. The Venezuelan government has announced agreements with companies such as GE Vernova and Impsa to help restore electrical infrastructure, but power outages continue to occur frequently in parts of the country.
Venezuela's financial position complicates any recovery plans. The country faces a liquidity crunch and a high overall debt burden, while oil revenue remains lower than it was a decade ago and the fiscal deficit has widened. In May, Caracas announced a debt restructuring that could surpass $200 billion. That process is expected to be lengthy and contentious. Venezuela's obligations span bonds, loans from multilateral institutions, arbitration awards, bilateral loans, and commercial debt.
This month the IDB reopened its Caracas office. IDB Invest representatives met with government officials and business leaders, and one person said there was discussion of a proposal for IDB Invest to provide financing to Venezuelan banks and companies. That type of financial support would be contingent on repayment of existing debt, according to the person who described the discussions.
Sources and anonymity
The people who provided details on the potential Qatari bridge loan spoke on condition of anonymity. They described the Qatar option as a mechanism to bridge arrears and allow IDB lending to resume, rather than as confirmed financing that has been finalized.
Official expectations
Acting President Delcy Rodriguez, who according to the sources assumed power following the US capture of President Nicolas Maduro in January, has said she expects Venezuela to receive $12 billion in public and private financing over the next two years as relations with multilateral organizations resume.
Outlook
The proposed sequence described by the sources is: secure a short-term loan to clear IDB arrears; obtain initial IDB disbursements; use those disbursements to repay the short-term loan; and preserve continued access to IDB financing lines for infrastructure, with an early focus on electricity and social protection programs. Key uncertainties include internal IDB board resistance, the broader condition of Venezuela's public finances, and the impact of external sanctions.