Venezuela’s President Hugo Chavez greets his supporters from the Miraflores presidential palace balcony in Caracas, Venezuela, Sunday, Oct. 7, 2012. Chavez won re-election and a new endorsement of his socialist project Sunday, surviving his closest race yet after a bitter campaign against opposition candidate Henrique Capriles.(AP Photo/Rodrigo Abd)
CARACAS, Venezuela (AP) — During his re-election campaign, President Hugo Chavez promised to deepen the “21st century socialism” that has meant an ever-greater state role in the economy. That message won him a surprising 11-percentage point win in what many had thought would be a tight race.
Still, he’s set to start a fourth presidential term under challenging economic circumstances. The government’s free-spending ways, bankrolling the generous social programs that aided his re-election, may be seriously crimped.
Chavez faces immediate economic time bombs beginning with a rapidly expanding public debt, one of Latin America’s highest inflation rates and a weakening currency.
Many economists believe Chavez will have no choice but to devalue the currency, the bolivar, by about half early next year at the latest. That will make the money in people’s pockets suddenly worth a lot less and likely drive inflation while putting imported consumer goods out of reach for poorer Venezuelans.
“He’s going to have to deal with some very basic, mundane capitalist things, like reducing inflation,” which stands at 18 percent, Login to read more