Inflation, currency woes worsen Venezuela's complex crisis as Maduro declares 'economic emergency'

MARACAIBO, Venezuela (AP) — Erick Ojeda has no money. He returned to land almost empty-handed from an overnight trip fishing for shrimp. His sister and her newborn are waiting for him to pick them up from a hospital. He has had no luck finding a ride there, so he is still helping fishermen get boats out of the water and weigh what little they caught.

The fishermen are all struggling, like most everyone in Venezuela, whose protracted crisis continues to evolve, entering a critical phase in recent weeks by further gutting people’s purchasing power and laying the groundwork for a recession. This latest chapter in the 12-year crisis even prompted President Nicolás Maduro to declare an “economic emergency" last week.

Tired, hungry and worried, the fishermen don't complain and keep to their tasks, or nap, under a hut with a view of an oil tanker on Lake Maracaibo. They know they are lucky to have a source of income, unreliable as it is, in 2025.

“I have to keep toiling away even if work is bad,” Ojeda, 24, said. “ We keep going trusting God. Let’s see if God works miracles to fix all of Venezuela.”

The country’s economy is unraveling yet again as key oil revenue dries up due to renewed economic sanctions punishing Maduro for electoral fraud and as his government finds itself with little wiggle room to respond despite some post-pandemic stability.

Economic renaissance

Venezuelans emerged from the pandemic to fully stocked grocery stores and the U.S. dollar as the dominant currency for everyday transactions. They left behind years of bartering, lining up for hours outside supermarkets or even fighting on the streets for flour, rice, bread or other food items. They also stopped carrying bricks of worthless bolivar bills to pay for necessities.

Those changes were the result of government decisions that eased price controls on basic goods and allowed consumers and businesses to use greenbacks without restrictions. They also occurred because the government used the Venezuelan Central Bank to inject millions of dollars into the foreign currency exchange market every week and prop up the bolivar.

Those government measures helped end a yearslong cycle of hyperinflation, which had reached 130,000% in 2018. Gross domestic product grew 8% in 2022, according to the International Monetary Fund, after the economy shrank about 80% between 2014 and 2020.

Maduro and his government began touting an economic renaissance of sorts. In the capital, Caracas, imported goods stores, restaurants, department stores and other businesses began to pop-up seemingly overnight. The use of ride-hailing and food-delivery apps proliferated. Some families in poor neighborhoods ventured into business ownership operating hot dog carts and other food stands.

But the growth mostly concentrated in Caracas, and communities across the country, including Maracaibo, which prides itself in being the heart of the oil industry, did not see major gains.

“If you pay more attention to those main avenues… you’ll see that most of the businesses are closed,” Luis Medina, 21, said pointing to an avenue in downtown Maracaibo. “There’s a Subway that’s closed, for example, and next to it is a Movistar (cellphone store), which is also closed. Next to it is an international restaurant, El Gaucho, originally from Argentina, which is closed, too."

US dollar as safe haven

Like people in other Latin American countries – and long before their nation came undone in 2013 – Venezuelans have used the U.S. dollar as a safe haven asset and see the exchange rate as a measure of the economy’s health.

Maduro’s government began using cash reserves in 2021 to artificially lower the exchange rate, making people at one point pay 3.50 bolivars for $1. That led to roughly 67% of retail transactions being made in foreign currency.

The rate grew slowly, and by 2023, Maduro’s efforts to inject dollars into the economy were aided by energy giant Chevron, which started regularly selling millions to banks to get bolivars to pay bills after the U.S. government let it to restart operations in Venezuela. The infusion of dollars allowed the government to maintain the rate around 35 bolivars to $1 through mid-2024, when the warnings of economists materialized.

“So many of us said that … sooner or later, it was going to be unsustainable,” economics professor Leonardo Vera said. “It was already evident in July that there were shortages of foreign currency in the official market in the face of growing demand, and those who couldn’t get foreign currency began to move to the black market, a very small market where when a surge in demand arrives… the price goes up.”

This month, the official rate reached 70 bolivars to $1, but the black market hit 100 bolivars to $1 last month.

Vera explained that factors influencing the price include Maduro’s reelection claim, the results of the U.S. election and the decision of the Trump administration to revoke Chevron’s permit to pump and export Venezuelan oil.

The Biden administration granted Chevron’s permit in late 2022 after Maduro agreed to work with Venezuela’s political opposition toward a democratic election. But the election, which took place in July 2024, was neither fair nor free, and Maduro was sworn in in January for a third six-year term despite credible evidence that his opponent got more votes.

‘Economic emergency’

Before the official and black market rates grew apart considerably, formal and informal businesses applied the government’s rate for transactions. These days, however, informal businesses, such as the food markets where the majority of Venezuelans buy groceries, favor the black market’s rate, making some goods unaffordable.

Prices have also increased at formal businesses, including grocery and hardware stores, because companies are setting them based on the expected higher cost to replenish their inventories.

Economist Pedro Palma said Venezuela's inflation rate could be between 180% and 200%. He warned that people will cut spending because salaries will not keep up with inflation and some could even lose their jobs.

“We have a truly dramatic outlook: on the one hand, skyrocketing inflation; on the other, the prospect of a very significant recession," Palma said.

Maduro last week sent a decree to the ruling-party controlled National Assembly seeking powers to enact emergency measures to “defend the national economy,” including suspending tax collections and establishing “mechanisms and percentages for mandatory purchases of national production to promote import substitution.”

He attributed the decision mostly to the impact of the U.S. tariffs on the global economy, but Venezuela’s latest economic troubles predated Trump’s announcement. Weeks earlier, he also announced the shortening of state employees' workweek, effectively giving them ample time to pick up second jobs to complement their approximately $1.65 monthly minimum wage and $100 monthly stipends.

But companies generally are not hiring, and some businesses are now paying employees in bolivars instead of dollars, which has increased the demand for greenbacks in the black market as exchange houses limit the sums available to the public.

The latest economic developments were the greatest fears of many Venezuelans ahead of last year’s presidential election. So much so that a nationwide poll conducted before the election showed that roughly a fourth of people were thinking about migrating, primarily for economic reasons.

Nowadays, though, people largely appear to have abandoned that idea partly because of Trump’s crackdown on illegal immigration.

Taxi driver Jonatan Urdaneta has transported migrants from the bus station in Maracaibo to the nearest border crossing with Colombia for two years. For about 18 months, he made two roundtrips a day and so did dozens of other drivers. He can now go a day without a single trip.

“Honestly, it’s looking very bleak,” Urdaneta, 27, said of his income prospects, standing next to his 1984 Ford sedan. “Let’s hope this improves when God allows.”