Fitch: Maduro’s Ouster, Sanctions Relief Paves Way for Venezuela’s Debt Settlements

Venezuela’s long-frozen relations with multilateral development banks could see a meaningful turnaround if recent political developments lead to the easing of international sanctions and an economic recovery, according to Fitch Ratings.

The credit rating agency said that the credit profiles of multilateral development banks (MDBs) with exposure to Venezuela would benefit if the removal of President Nicolás Maduro results in a relaxation of U.S. sanctions and a gradual normalization of the country’s economy.

Fitch noted that any sanctions relief could reopen Venezuela’s path toward economic reintegration, potentially unlocking a support program from the International Monetary Fund (IMF). However, the agency stressed that IMF financing would likely be contingent on Venezuela settling its arrears to multilateral lenders, or at least presenting a credible, agreed-upon repayment plan backed by financing assurances.

Venezuela currently owes approximately $4 billion to multilateral development banks, with the bulk of the exposure concentrated at the Development Bank of Latin America (CAF) and the Inter-American Development Bank (IDB). The International Fund for Agricultural Development (IFAD) holds a comparatively small exposure.

These obligations have remained in arrears since 2019 for CAF and 2018 for the IDB, largely due to the expansion of U.S. sanctions imposed on Venezuela beginning in 2017, Fitch said.

Despite their political sensitivity, MDB claims represent a relatively modest portion of Venezuela’s total external debt. Fitch estimates that multilateral debt accounts for less than 3% of the country’s outstanding foreign liabilities, although the lack of transparent public data makes precise calculations difficult.

From the lenders’ perspective, Venezuela-related exposures remain manageable. Fitch estimates that Venezuelan debt represents around 5.3% of CAF’s loan portfolio, 1.7% of the IDB’s, and just 0.1% of IFAD’s.

Given their status as preferred creditors, Fitch’s base-case scenario assumes that arrears to multilateral banks would be settled ahead of any broader sovereign debt restructuring. The agency said Venezuela would have strong incentives to prioritize these repayments in order to regain access to development financing and international support.

Still, Fitch cautioned that the extent of U.S. influence over Venezuela’s post-Maduro trajectory remains uncertain. Washington could play an unusually prominent role in shaping any future debt restructuring process, potentially complicating negotiations over creditor treatment and prolonging the time required to reach a comprehensive agreement.

Nevertheless, Fitch concluded that progress on clearing multilateral arrears would likely be a critical early step in Venezuela’s economic rehabilitation, serving as a signal of policy normalization and renewed engagement with the international financial system.