Venezuela’s post-referendum hangover

Two days after Venezuela celebrated the passage of a referendum to remove term limits, the country still seems to be shaking off a hangover. Analysts the world over are mulling over the Venezuela’s rising inflation, alarming debt burden, and perceived fiscal shortfall as oil prices fall to dismal lows. Putting it more frankly, a former ...

By , International Crisis Group’s senior analyst for Colombia.
588510_090217_chavez5.jpg
588510_090217_chavez5.jpg

Two days after Venezuela celebrated the passage of a referendum to remove term limits, the country still seems to be shaking off a hangover. Analysts the world over are mulling over the Venezuela’s rising inflation, alarming debt burden, and perceived fiscal shortfall as oil prices fall to dismal lows.

Putting it more frankly, a former Venezuelan central bank official says the country is headed for certain stagflation. “A model based on the state entrepreneurial role is being depleted,” he told El Universal. Rough words for a President who has nationalized the oil industry, among others, and may soon do the same in banking.

But if the markets say anything, it is that Chavez will simply have to start reigning in his popular but extensive spending — something he’d avoided doing until the votes were cast. The country’s currency rose on precisely those hopes yesterday.

From the looks of it, Hugo Chavez did indeed enjoy the hell-of-a party in Caracas on Sunday night, celebrating his big win. Good thing. One of the catchier slogans of the campaign, “Oh, ah, Chavez no se va!”, is Venezuela’s reality: Chavez isn’t going anywhere. Is he sure it’s a job he wants anymore? La recesion, tampoco, no se va…

Photo: THOMAS COEX/AFP/Getty Images

Elizabeth Dickinson is International Crisis Group’s senior analyst for Colombia.

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