Fitch sees policy Venezuela continuity after Chavez win

Reuters News
Posted: Oct 08, 2012 2:23 PM
Fitch sees policy Venezuela continuity after Chavez win

NEW YORK (Reuters) - Rating agency Fitch on Monday said that Venezuelan policy will likely stay steady in the wake of a re-election victory by President Hugo Chavez, which could ultimately increase government debt levels.

Chavez's hefty 10-point margin of victory and rapid acknowledgement of defeat by the challenger eased fears of social unrest, Fitch said in a statement.

But "considerable uncertainty remains over the government's ability to rein in the fiscal deficit, while at the same time maintaining economic growth and fighting inflation."

Chavez pledged to deepen his socialist revolution after his victory, which could extend his divisive leadership of the OPEC nation to two decades.

The new six-year term clears the way for Chavez to consolidate state control over Venezuela's economy, possibly with more nationalizations, and continue his support for left-wing allies in Latin America and around the world.

"We believe that in the absence of policy adjustments, government indebtedness is likely to continue to increase," Fitch added.

Fitch rates the country B-plus with a negative outlook. Standard & Poor's rates Venezuela B-plus with a stable outlook. Moody's Investors Service rates the country B2 with a stable outlook.

(Reporting By Luciana Lopez)