Venezuela Quits Imf and World Bank

The Venezuelan president, Hugo Chavez, today severed ties with the World Bank and International Monetary Fund.

In doing so he distanced Caracas further from what he described as Washington-dominated institutions.

The populist leader, who took office pledging to pursue radical political reform and an economic "third way," said yesterday that Venezuela no longer needed institutions "dominated by US imperialism."

Speaking at a May Day event, Mr Chavez said: "We don't need to be going up to Washington... We are going to get out. I want to formalise our exit from the World Bank and the International Monetary Fund."

Venezuela has been loosening its ties to the IMF and the World Bank since Mr Chavez took office in 1999. Venezuela recently repaid its debts to the World Bank five years ahead of schedule. In doing so it savied $8m (£3.99m) and cleared all its debts to the IMF shortly after Mr Chavez was elected.

The IMF closed its offices in Venezuela late last year. Mr Chavez intends to set up a new lender run by Latin American countries called the Bank of the South. He has pledged to support it with Venezuela's booming oil revenues.

Venezuela has cut its dependence on the multilateral lending institutions on the back of its oil resources - the world's largest outside the Middle East. The petroleum sector dominates the economy, accounting for 50% of central government revenue and 70% of exports.

The Venezuelan economy has experienced 10 consecutive quarters of sustained high growth. This is due in large part to high public spending and private consumption, fuelled by high oil prices and historically low interest rates.

Mr Chavez is nationalising huge swathes of the economy this year and was today scheduled to lead a rally to mark the takeover of operations belonging to some of the world's largest companies.

US companies ConocoPhillips, Chevron, ExxonMobil, Britain's BP, Norway's Statoil and France's Total have agreed to obey a decree to transfer operational control to Venezuela.

Mr Chavez said the takeover marked the end of an era of Washington-dictated policies and returned Venezuelan resources under the state's control.

"The wheel has turned full circle," he said.