Interim President Delcy Rodriguez has asked IMF Managing Director Kristalina Georgieva for access to $5 billion in special drawing rights (SDRs) that Venezuela holds. This would be used for infrastructure, electricity, and water improvements.

The new administration has also opened the energy sector to foreign investment. Shell will develop the Loran field, which had been abandoned for 23 years, and comprises seven natural gas deposits, with six of them straddling the maritime border with Trinidad and Tobago. As per Rodriguez, the project would allow Venezuela ‘to take a very important step forward in its gas development, and also as a gas exporter’.

After taking over Venezuela’s reigns post the US-staged arrest of controversial president Nicholas Maduro, the Rodriguez government has identified the Latin American country’s huge energy reserves as one of the routes to help the nation escape its economic abyss. Agreements have been signed with several of the world’s leading oil companies, including Britain’s BP and Spain’s Repsol.

Chavismo: A period of mixed opportunities

The 1999–2013 phase under Hugo Chavez was all about a massive, oil-fuelled expansion of social spending and poverty reduction, coupled with the erosion of long-term economic stability through nationalisations, rigid price controls, and extreme dependence on petroleum exports.

Under Chavez, Venezuela benefited from a historic surge in global oil prices, which skyrocketed from roughly $11 per barrel in 1998 to over $100 by the late 2000s. The influx of petrodollars allowed the administration to double domestic social spending. It heavily subsidising food, healthcare, and education, which significantly reduced poverty and income inequality during his presidency.

The Chavez administration nationalised major industries. In 2003, it brought forward stringent currency and exchange controls to prevent capital flight from the Latin American nation, alongside strict price controls on basic goods.

However, it missed a trick, by not using its oil wealth to diversify the domestic economy. By the end of Chavez’s term, petroleum accounted for 95% of Venezuela’s export revenues, and about half of all government income.

The move of purging state-run enterprises of experienced workers, and replacing them with political loyalists was another blunder, as the move hindered productivity. By the time of Chavez’s death in 2013, the foundation of the economy was critically damaged by rampant inflation, chronic shortages of basic goods, and an overvalued currency.

Chavez must be credited for sharing Venezuela’s vast oil wealth with the poor and disenfranchised. Chavismo (the term that defined the Chavez-led left-wing populist movement in Venezuela) witnessed the percentage of Venezuelans living below the poverty line falling to 36.3% in 2006 from 50.4% in 1998.

Infant mortality fell from 20.3 per thousand births when Chavez came to power, to 12.9 by 2011. The access to education was another massive plus for the country, with the number of children enrolled in secondary education rising from 48% in 1999 to 72% in 2010.

However, ‘Chavismo’ came at a cost, as the Latin American country had to reduce state-run oil company PDVSA to the status of a ‘piggy bank’, in order to sponsor the government’s social security projects, while neglecting oil infrastructure and production.

Maduro rule: The abyss kicks in

However, the real downfall happened in March 2013, as Nicholas Maduro took over the administration’s reigns immediately after Chavez’s death.

The domestic economy shrank 71% between 2012 and 2020, while inflation topped 130,000%. Its oil production, the beating heart of the country, dropped to the unthinkable less than 400,000 barrels a day.

Between 2013 and 2025, as per the World Bank and the IMF, approximately 80% of the country’s GDP evaporated, a figure that dwarfs what happened to the United States in the Great Depression (29%), and to the Soviet Union during its collapse.

Along with the structural fragility, Venezuela missed the opportunity to utilise sovereign wealth funds to sterilise the liquidity generating from its trade. Even though the Latin American nation had an entity called Macroeconomic Stabilization Fund (FEM), by 2014, the fund held less than $3 million.

As crude prices collapsed, Venezuela faced a choice between fiscal austerity or monetary expansion. As per Iranian freelance journalist Amirreza Etasi, a keen observer of Maduro’s economic missteps, the administration attempted to plug a fiscal gap, approaching 15% of GDP, not by cutting spending, but by expanding the monetary base.

As inflation ticked upward, the government attacked the symptom (prices) rather than the cause (liquidity). The 2014 ‘Fair Prices Act’ capped profit margins, and mandated sales below replacement cost.

“The economic result was a textbook negative supply shock. Manufacturers, unable to cover marginal costs, halted production lines. The scarcity index for basic goods skyrocketed to over 80%. To manage the fallout, the government militarised food distribution (CLAP), shifting from a market economy to a clientelist rationing system prone to massive corruption,” Etasi said.

Simultaneously, the Central Bank of Venezuela (BCV) was stripped of its autonomy, with Maduro government turning the entity as a printing press for the Ministry of Finance. This triggered hyperinflation (technically defined as monthly inflation exceeding 50%) in November 2016. By 2018, annual inflation hit an astronomical 130,060%, though IMF estimates were higher.

To mask the collapse of the currency’s value, Venezuela engaged in serial redenomination. In 2008, three zeros got removed. In 2018 and 2021, the number stood at five and six, respectively. In total, 14 zeros were removed from the currency in 13 years.

Post the 2002–03 PDVSA strikes, the executive branch of the oil company fired over 18,000 technocrats (geologists, reservoir engineers, and managers) stripping the company of its institutional memory. They were replaced by political loyalists.

“In the capital-intensive oil industry, failure to invest in depreciation and amortization (D&A) is fatal. PDVSA stopped injecting water and gas into aging wells to maintain pressure. Result: production freefall from three million barrels per day (bpd) to a nadir of under 700,000 bpd by 2020. The collapse was sealed by the physical failure of the power grid. The March 2019 nationwide blackout, caused by brush fires and neglected transmission lines at the Guri dam, paralysed the country for days. Without electricity to power the upgraders in the Orinoco Belt, the heavy crude turned into sludge in the pipes, causing permanent damage to the infrastructure. This event alone cost the economy an estimated $2.9 billion in GDP,” Etasi remarked.

By 2019, price controls were abandoned, and the US dollar was allowed to circulate freely (de facto dollarisation). While the move stopped the hyperinflationary bleeding, it bifurcated the nation into two distinct economies.

The dollar economy (20%) was a segment fuelled by remittances, illicit gold exports to Turkey/UAE, and government contracting. On the other hand, emerged the bolivar economy (80%): Public sector workers and pensioners earning in local currency, whose purchasing power was obliterated.

By late 2025, oil production crawled back toward 900,000 bpd, aided by specific licences for United States’ Chevron and swap deals with India’s Reliance Industries involving naphtha for crude. However, with a credit-starved banking sector (due to 73% reserve requirements) and decimated public utilities, sustainable growth remained mathematically impossible.

The Gini coefficient, on the other hand, rose from 40.7 in 2014 to 53.9 in 2024, making Venezuela the most unequal country in the Americas. In 2025, Venezuelan inflation soared to 475% in 2025, the highest in the world.

On 2019, Washington imposed full blocking sanctions on the government of Venezuela, freezing all its assets in the United States, and cutting off state-owned oil company PDVSA from the American financial system.

Facing the heat, Maduro did implement a series of economic measures in 2021 that eventually ended Venezuela’s hyperinflation cycle. He paired the economic changes with concessions to the US-backed political opposition, including negotiations for what many had hoped would be a free and democratic presidential election in 2024.

However, in April 2024, the then Joe Biden government allowed the primary oil and gas waivers to expire, citing a failure by the Maduro government to uphold the democratic commitments made in the 2023 Barbados Agreement.

Delcy Rodriguez: Administrator facing a daunting task

Delcy Eloina Rodriguez Gomez, daughter of the Venezuelan guerilla leader and politician Jorge Antonio Rodriguez, wears multiple hats: lawyer, diplomat, and politician. The third is the one she is wearing now. Her promotion from vice-president to President came in January 2026, immediately after Maduro’s arrest.
She has inherited an economically fragile country that needs more than miracle to become ‘great’ again (going by Trump’s immediate reaction on her appointment). The American sanctions on the Venezuelan Central Bank (BCV) have been lifted, and Luis Perez-Gonzalez, deputy of former BCV President Laura Guerra, has been handling the institution’s leadership role since April this year.

It was the same BCV that remained a mere spectator when multiple zeros got stripped from the bolivar after one of the longest hyperinflationary episodes in modern history. Also, the central bank, during Maduro’s time, became notorious for not publishing key economic data. And when it started publishing stats, they were incomplete, forcing IFM and World Bank to stop cooperation with Venezuela in 2019.

The task of converting BCV from a mere spectator of government-sponsored economic miscalculations to the lead actor of Venezuela’s transformation will be a painful task. In the near term, the effects of sanctions relief will likely be most visible in exchange rate auctions, with greater transparency and reliability in these operations potentially helping reduce the gap between the official and the black market rates.

This would directly affect people’s daily life, by reducing price distortions, and helping stabilise inflation expectations. It would also reopen the door to multilateral institutions and international markets, particularly renewed engagement with the IMF, a necessary step toward debt restructuring and access to credit.

However, BCV 2.0 should be independent from political pressures, apart from possessing the ability to communicate a coherent monetary policy. This will satisfy Venezuela’s economic discourse, apart from attracting investment. BCV should be the first ‘government institution’ in the post-Maduro era, that should be capable enough to challenge the administration’s economic narratives.

Despite having abundant natural resource, the state-sponsored mistakes of blocking manufacturing development and industrial diversification have resulted in long-term stagnation and inequality.

Wages in the Venezuelan labour market, based on a mix of public sector, state-owned companies, private activities and a very extensive informal economy, are insufficient to cover basic needs. Being a formal employee no longer guarantees an acceptable standard of living, pushing many public servants to take on side jobs, or turn to the parallel economy.

580,000: the exact number of active businesses, that have been destroyed in Venezuela since early 2000s. The tally of 830,000 from the beginning of the 21st century now stands at less than 250,000 today.

With real GDP collapsing by more than 75%, along with hyperinflation, the country has shifted into a de facto dollarisation, where the sovereign bolivar (VES) coexists with the US dollar, which has become the standard for salaries and prices.

More than 7.5 million Venezuelans have left the country since 2015, about 22.5% of the population. Between 2012 and 2017, 22,000 doctors emigrated, as did more than 167,000 teachers. This exodus has created skill shortages in many sectors, while further weakening education, healthcare, and administration.
Reforms: Key weapon for Rodriguez administration

Rodriguez has brought new laws and regulations reversing Chávez’s nationalisation drive, by reopening key sectors, like hydrocarbons and mining, to private investment.

She has formed a ‘Commission for the Evaluation of Public Assets’, that will audit state ownership in other economic areas, such as agriculture, manufacturing and infrastructure.

Another commission has been formed, consisting representatives from the state, business sector, active workers, and pensioners to ‘review labour conditions, address precariousness, and strengthen the social security system’.

An increase in the so-called ‘integral minimum income’ to the equivalent of $240 per month has been implemented for public sector workers. The amounts are set in US dollars but paid in bolivares at the day’s official exchange rate set by the central bank.

The latest adjustment involved an increase of the ‘economic war bonus’ from $150 to $200 a month, alongside a $40 monthly food bonus. The economic war bonus for pensioners has been raised from $58 to $70 a month, and for public sector retirees from $130 to $168.

There will be a new, one-time ‘professional and academic recognition’ bonus, ranging between $60 and $120, aimed at strategic sectors, such as security, education, and healthcare. Labour inspectorates have been told to address workers’ demands regarding employment conditions.

Venezuela’s National Economic Council has been tasked with designing a more ‘efficient’ tax model aimed at making the Latin American country ‘more competitive’.

The Law on Streamlining and Optimization of Administrative Procedures have been enacted, with the goal of modernising public administration by reducing bureaucracy and incorporating digital tools. The law grants the executive authority to eliminate procedures, shorten timelines, and improve coordination between institutions.

Another mixed commission will evaluate which state-owned assets have ‘strategic’ importance, potentially opening some to private investment. However, the hydrocarbons sector will remain under state control.

The energy sector reform

The partial reform to the ‘Organic Hydrocarbons Law’ has now brought more flexible taxation, apart from lowering royalty baseline rates, and repealing previous restrictive levies to incentivise investment.

On the other hand, the electricity sector has been thrown open to private investment, allowing the creation of joint ventures. The sector, under Maduro administration, earned the infamy of lacking both investment and maintenance. Large parts of the country used to endure hours-long electricity outages, affecting water and telecommunications services.

GE Vernova Venezuela recently signed a Memorandum of Understanding (MoU) with the Venezuelan government to add at least 1 GW of electrical capacity to the National Electric System (SEN) within 24 months. The broader objective contemplates recovering more than 5 GW of capacity over the next four years.

As per the Financial Times, Wall Street banks and funds have now set their eyes on Venezuelan oil assets after Trump’s $100 billion investment pitch (that came in January) and recent legal reforms. Lionheart Capital and Elliott Management are among those pursuing deals, while JPMorgan and Jefferies lead investor trips to Caracas. ExxonMobil and ConocoPhillips, however, are in the ‘wait and watch’ mode, citing unresolved governance, contract, and debt issues.

US Treasury issued sanctions waivers allowing select Western firms to operate, and contract disputes can now be settled in the United Kingdom, France, or Singapore under American law. Venezuelan authorities have already revised proposals under investor pressure, removing clauses allowing government termination for ‘public interest’.

By May, Venezuelan oil production moved past one million barrels per day (bpd) for the first time in over seven years. The feat, confirmed by an OPEC monthly report (apart from measured by secondary sources), was made possible due to a massive 46,000 bpd production increase compared to the March-April period.
It has been a good comeback from the abyss of 2019, when the imposition of American sanctions and export embargo on the Venezuelan energy sector resulted in crude production plummeting under one million bpd, hitting a low of around 350,000 bpd in 2020.

The final take: Nurturing democracy

Rodríguez is not out of the woods yet. Democratic transition is another front, where the acting President will be facing tremendous heat in the coming days.

The return of opposition leader Maria Corina Machado, who the Maduro government barred from competing in the July 2024 election, is imminent. However, things have got complicated, with the comeback of Dinorah Figuera, an exiled lawmaker and elected president of the parallel opposition National Assembly that emerged after the 2015 parliamentary election, after eight years. As per the reports, she has the backing of both Trump and Rodriguez.

What kind of political economy will emerge in the Latin American country in the coming days is not clear. However, it is clear that the Latin American country is betting on its natural resources to come out of the decades-long rut.

More than the hydrocarbons, investing in and uplifting the fragile social sector will make the real difference, if the country wants to be a healthy and competitive economy in Latin America in the coming days.

The post Earthquakes Derail Venezuela’s Escape From Abyss appeared first on International Finance.

John Mangudya, Zimbabwe’s central bank chief, introduced the new gold coins, which will be available through usual banking institutions. He presides over the Monetary Policy Committee, which decided to mint gold coins.

The coins will be minted at Fidelity God Refineries (private) Limited, the sole refining and gold buying entity in the nation and is a subsidiary of the central bank.

The government has been trying to rescue Zimbabwe from hyperinflation, devaluing currency, 90% unemployment, and a free falling manufacturing output.

The Zimbabwean dollar, which currently trades at $1:650 on the black market, has continued to lose value over the previous three months, increasing inflation pressures in the nation.

The central bank’s printing of new currency has also made things worse by undoing the progress made over the previous two years, during which time inflation declined from a peak of 800 percent in 2020 to 60 percent in January of this year.

The central bank will increase the annual interest rate from 50% to 100% and more than triple the lending rate from 80% to 200% per year to stabilize the economy.

Independent economist Victor Bhoroma, based in Harare, applauded the top bank’s actions and claimed that positive interest rates would cut down on “speculative borrowing in the economy” and the expansion of the money supply.

According to Bhoroma, gold coins are a wise choice for safeguarding value. If offered in Zim dollars, it may be a means to stabilize inflation while easing pressure on the US currency. But they’ll probably be indexed in US dollars, suggesting that the central bank uses this as a fundraising ploy to obtain USD from the market. Thus, the success will depend on public trust in the central bank’s ability to sell coins and the credibility of the promises that back them.

He added the market would continue to favor hard currency if confidence keeps falling.

An eagerly anticipated development
The concept of gold coins appears to be winning over investment analysts.

The gold coin is a positive move in a market lacking in investment possibilities, according to Batanai Matsika, head of research for stockbroking firm Morgan & Co. It will also help investors hedge against inflation.

According to Matsika, there haven’t been many investment alternatives on the market for a while, and this is a new asset class. The necessity to develop a tool that solves the inflation issues in the economy, where purchasing power has eroded, was what prompted the thought, he continued. Gold will be a great alternative as a store of value.

He added that the idea was not entirely new and that some fundamentals of gold enable it to act as a hedge against inflation and geopolitical risk.

The Kruger rands are being imitated, according to Matsika. It’s also a method of allowing regular investors access to the gold market. It’s a potentially exciting field from the perspective of investment advisory. It might turn out to be beneficial.

Tatenda Mabhande, an economist with Akribos Capital in Harare, voiced confidence in the gold coin’s capacity to serve as a store of value.

Given the erosion of the value of the Zimbabwean dollar, Mabhande argued that the gold coin serving as a store value is a positive development. The US dollar was the primary store of value. Although the move may lessen pressure on the US dollar, there will still be demand for the USD. However, he added that he doesn’t think the gold coin will reduce exchange rate volatility.

He claimed that the government created the gold coin to lessen demand for the US dollar.

He continued by saying that there would still be a demand for dollars while Zimbabwe remained a net importer. Bad money will eventually push good money off the market. We’ll probably also notice the coins vanishing.

Mabhande claimed that for the gold coins to be effective, buyers must be able to make their purchases using Zimbabwean dollars rather than US dollars to reduce the amount of extra local currency in circulation.

For the gold coins to be treated as money and for investors to utilize them as a substitute for the US dollar, Mabhande continued, the central bank must make sure that the face value of the coins “is always larger than its intrinsic value.”

Isaac Muzambi, a spokesman for the central bank, did not react to questions regarding the anticipated launch date for the gold coins.

Policy changes
President Emmerson Mnangagwa, who has been in office since November 2017, is keen to solve some of the economic issues his administration inherited, which is why the central bank is taking these actions now.

Mnangagwa had pledged to reveal more economic measures on Saturday to stabilize the economy. Mthuli Ncube, the finance minister, made announcements on Monday that include, among other things, raising salaries for government employees and an upward review of education and the health sector employee allowances.

Ncube also attributed the inflation and devaluation of the Zimbabwe dollar to businesses and Zimbabweans.

Speaking to reporters in the city, he said that new “econometric studies done by the University of Zimbabwe” supported his statements and that inflation “is not being generated by the regular actual economic determinants but by behavioural characteristics such as confidence, unfavourable inflation expectations.”

Additionally, Ncube forbade discounts on rates for payments made in US dollars and warned that violators would face criminal charges and have their operating permits removed.

Bhoroma claimed that the minister’s actions weren’t very noteworthy.

He claimed that the USD is already recognized as legal currency under the Finance Acts of 2009 and 2012, and there was nothing significant about the Treasury announcement. A positive step toward bringing stability and assurance to banks who get lines of credit for future lending to the commercial sector is the law to ensure the protection of US Dollar credit.

He said that eliminating the diesel tax and reductions in the fuel levy would have little impact on the cost of fuel in the nation because Zimbabwe’s prices remained the highest in the SADC, making local goods less competitive.

World Bank’s warning
The World Bank (WB) predicted that Zimbabwe’s economy would expand by 3.7% this year, less than the government’s forecast of 5.5%.

Marjorie Mpundu, the WB’s country manager for Zimbabwe, attended the Zimbabwe National Chamber of Commerce 2022 congress on Wednesday in Victoria Falls. She said that amid slowing growth and rising inflation, the country must concentrate on price stabilization to prevent stalled recovery.

The immediate challenge, she continued, is ensuring pricing and exchange rate stability. Global experience demonstrates that it is preferable to provide targeted assistance to the poor and take advantage of the chance to promote greater efficiency to hasten the transition to low-carbon energy sources rather than providing subsidies and other distortionary measures to lessen the effects of higher energy prices.

In light of the heightened budgetary strains, it’s critical to safeguard long-term growth by ensuring sufficient funds for social safety, education, and health.

She noted that eventually, streamlining corporate regulation and boosting trade facilitation will benefit any future growth.

Mpundu claimed that despite potential uncertainties, Zimbabwe’s economic prospects appeared promising.

Due to increased global concerns, she stated there were considerable risks to the picture.

Domestic risks affect growth outcomes and are correlated with climate shocks, expansionary fiscal and monetary policies, and slower economic recovery, according to her.

WB also predicted that, despite being marginal, poverty levels would continue to reduce in 2022 even though the likelihood of a successful harvest decreases.

Having said that, Zimbabwe’s price dynamics are likewise unfavourable globally. Yes, it is anticipated that the price of gold and nickel will rise this year, but these gains will be countered by lower fuel, food, and fertilizer imports. Additionally, she added, the anticipated fall in key prices over the next two years will strain the balance of payments and lower tax collections.

Mpundu claimed that this year’s higher food costs and overall inflation levels put further strain on the budget and made things worse for Zimbabwe’s extremely poor.

To lessen the impact on the most vulnerable segments of the population, she said, there would need to be more budget support for social protection.

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Zimbabwe Finance Minister Mthuli Ncube believes that in order to combat these inflationary forces, an aggressive tightening of monetary policy is required.

Of late, Zimbabwe has witnessed an increase in the prices of imported food, petrol, fertilizer, and other commodities.

Ncube claimed that as a result, the rate of inflation increased to 192% in June.

In truth, inflation was very high before Russia invaded Ukraine. It quickly rose from 0% in 2000 to 114% in 2004, then surged even higher to reach 157% in 2008 before reaching its peak at 558% in 2020.

In Zimbabwe, there are two enduring primary causes of inflation. The first is monetary expansion without accompanying economic expansion. When an economy has more money than it can spend on goods and services, prices rise and buying power declines.

The second has to do with what Zimbabweans currently anticipate in terms of inflation. When prices of goods and services remain stable over time and commensurate with what consumers expect to pay for them, expectations are typically anchored.

This is not the situation in Zimbabwe anymore since expectations have been unanchored. When costs are drastically different from what consumers anticipate, this occurs.

Raising salaries and the demand for products and services, if they are rising, can have an inflationary effect. Higher demand and wages could drive up prices even further, self-fulfilling inflation expectations.

Venezuela in 2017 is an example of a different country that experienced hyperinflation and destabilization of expectations.

The post Zimbabwe increases benchmark rate: Citizens to face inflation’s ripple effect? appeared first on International Finance.