Venezuela’s economic crisis has reached a crisis point, but the International Monetary Fund has called for the government to begin a recovery and tackle the country’s chronic economic problems by December.
In a report to be released Tuesday, the IMF said that while the country is still in a recession, the government’s actions to address the crisis, including debt restructuring and privatizations, have made a substantial difference.
“The government’s debt-to-GDP ratio is approaching 70% and the gross domestic product is expected to fall by more than 6%, the IMF forecast, adding that the current level of public debt is likely to grow further, as well as other debt that has not been repaid,” it said.
“However, the country will not be able to pay back all of its debt unless debt restructuring efforts are further accelerated.”
In February, Maduro signed a restructuring bill that called for restructuring of debts owed by state-run oil company PDVSA, as part of a deal to raise the country from a third-world status to one of the most prosperous economies in the world.
In July, Maduro also announced a $3 billion privatization program, including the sale of state assets to private companies, that is expected in 2019.
Maduro has also launched a new oil exploration project, but it is unclear how much the government will spend on it.
“Venezuela’s current and projected debt situation is expected by the IMF to be about $20 billion, which will require substantial debt restructuring,” the IMF report said.
Venezuela’s debt is expected increase from $40 billion in 2015 to about $50 billion in 2019, according to the report.
The country has about $60 billion in total public debt, which has grown rapidly in the past two years as the government has increased spending on public infrastructure and public pensions.
Maduro said in June that he would increase public pensions from 6% of GDP to 11% by 2021.
The government also plans to sell off some of the assets owned by the state oil company, and to privatize the public utilities and other government assets, which are estimated to cost about $1 billion.
The IMF’s new assessment follows a similar report by the U.S. Federal Reserve in March that said the country could experience a “severe economic and fiscal shock” if oil prices fall to below $60 per barrel.
Inflation, which was already soaring, has soared to more than 50%, the highest rate in the region.
In December, the Venezuelan government declared a state of emergency to stop inflation rising more than 10% per year.
The United States has imposed sanctions on Maduro and has imposed economic sanctions on many Venezuelan officials.
The U.N. and the Organization for Economic Cooperation and Development have imposed sanctions against Maduro, including a ban on exports of oil and gas and a ban from holding foreign currency transactions.
Venezuela has also imposed a ban against U.K.-based oil company Total SA, which it said in February it was buying from Venezuelan state oil firm PDVSO.