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Alternative Market Briefing

The Big Picture: Economic crisis looms in Venezuela

Friday, January 11, 2013

Nicolas Maduro
An Opalesque column for global macro investors.

Benedicte Gravrand, Opalesque Geneva:

President Hugo Chavez’s fourth consecutive term begun on 10th January, although the official inauguration was postponed as Chavez is once more being treated for cancer in a hospital in Havana, and, according to the latest reports, seriously ill. In October 2012, he won 55% of the vote while his main opponent, Henrique Capriles, won 44%. Nicolas Maduro will continue as both the vice president and the acting president.

According to several specialist reports, the current power vacuum and shaky economic situation may lead to an economic crisis especially if deficits, cash reserve and currency issues are not tackled as soon as possible. But not much can be done before a proper transition of power.

King Chavez

Venezuela’s constitution, which Mr Chávez pushed through in 1999, says that if the president-elect’s incapacity is temporary, the vice-president should step in for up to 180 days, The Economist reports, and goes on to say now is really not a good time for a power vacuum.

"The country faces an economic crisis," the article says. "Having ramped up spending to win the election, the government ran a budget deficit of 8.5% of GDP last year, according to independent economists. Pluggi......................

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