Maduro Faces Economic Crisis as Dollar Reserves Dwindle and Bolívar Plummets

Venezuelan President Nicolás Maduro is grappling with escalating economic challenges as his administration rapidly depletes the nation’s dollar reserves. Following his controversial declaration as the winner of the July presidential election, Maduro has faced significant international criticism, widespread protests, and a noticeable distancing from former allies.

The bolívar has weakened significantly in unofficial markets, trading up to 20% below the official rate, the widest gap since 2022. This drop highlights the shrinking dollar reserves, partly drained by Maduro’s election-related spending on rallies and advertisements.

Economist José Manuel Puente from the Institute of Higher Education in Administration in Caracas noted, “The government decided to keep the exchange rate anchored for political and electoral reasons. The imbalance will end as it always does in Venezuela: with a large exchange rate adjustment, probably with an inflationary shock, and with an economic slowdown or recession.”

Maduro defended his expenditures, saying, “That is not waste. It’s the necessary investment for the country to continue its course.”

Rising inflation is causing severe strain on businesses and contributing to the hardship of 82% of Venezuelans living in poverty. This economic pressure is likely to worsen the migration crisis, which has seen nearly 8 million people leave the country since 2015.