WASHINGTON -- The International Monetary Fund said Wednesday it has approved its first loan ever to Venezuela, a $443 million credit for immediate disbursement in support of the government's economic reform program.
Venezuela also could receive $4.5 billion in additional loans over the next three years, an IMF spokesman said.
Such financial support should help the South American country to obtain credits from other multilateral institutions and financing from private banks, the IMF said.
It is expected that Venezuela will be one of the first beneficiaries of Treasury Secretary Nicholas Brady's plan to reduce developing countries' debt to private banks.
At the end of February, Venezuelan President Carlos Andres Perez announced an economic reform program to make the country's economy less dependent on oil exports. The program received the support of the IMF.
Wednesday's $443 million loan 'is the first use of fund resources by Venezuela,' the multilateral organization said.
The operation is a so-called 'first tranche loan,' equivalent to the first 25 percent of Venezuela's $1.77 billion IMF quota.
First tranche loans, considered low conditionality operations, require economic and financial commitments on the part of the receiving country, but not the IMF's monitoring of its fulfillment.
If a country wants to receive further tranches of its quota, the IMF raises the severity of its conditionality and starts monitoring compliance.
The IMF said that in late 1985, Venezuela 'shifted to a policy of stimulus resulting in the emergence of inflation and growing pressures on the balance of payments.'
By early 1989, Venezuela had nearly exhausted its liquid foreign reserves and was encountering increasing difficulties in meeting scheduled debt service payments, the IMF said. The Venezuelan external debt exceeds $30 billion.
The Perez government decided to implement 'a comprehensive adjustment program designed to restore external viability and set the conditions for sustained economic growth over the medium term,' the IMF said.
The objectives of the government's program are to reduce the dependence of the economy on oil by broadening the export sector, to achieve a sustainable external current account position consistent with real economic growth of 4 percent to 5 percent a year, and to reduce Venezuela's debt service burden while strengthening the international reserve position of the Central Bank, the IMF said.
This medium-term strategy is expected to provide the basis for a request for IMF support in the form of an extended arrangement as well as policy-based lending by other international institutions, such as the World Bank, and enhanced support by private creditors, the IMF said.
In addition, it is expected that the program will serve to encourage a substantial reflow of private capital from abroad, the IMF said.