President Hugo Chavez is due to be sworn in for a fourth consecutive mandate on 10 January. However, as Mr Chavez has suffered complications after a cancer operation in Cuba, he is likely to be unable to physically attend the swearing-in ceremony. The inauguration ceremony could be delayed or Chavez could be sworn in before the Supreme Court in Cuba. The leader of the opposition Henrique Capriles Radonski is likely to tacitly approve both solutions in a pragmatic approach following the opposition’s defeat in the regional elections held mid-December. During his absence, Chavez has devolved his powers to his Vice-President and chosen successor Nicolas Maduro - a moderate close ally - to authorise debt issues, accept draft 2013 budget and expropriate assets. If Mr Chavez were to die in the first four years of his term, an election would be called according to the constitution. If it were to occur in the last two years of the presidential term, the Vice-President would take over.

Impact on country risk

Political uncertainty remains high around Chavez’s health. Moreover, foreign exchange reserves are depleting and covered less than one month of imports last September, which is extremely low compared to international standards and the historical level of Venezuela’s FX reserves. If the latter continue to follow their downward trajectory, the short-term political risk, which reflects the country’s liquidity, will be revised downwards ceteris paribus. ONDD classified the commercial risk at the highest level due to the difficult business environment and risk of further devaluation in 2013. The MLT political risk is likely to remain stable as it already takes into account political uncertainty.

Analyst: Pascaline della Faille, p.dellafaille@credendogroup.com