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The
National Electoral Council is likely to exceed the deadline stipulated for
the verification of the signatures gathered by opposition forces to call for
a nationwide referendum on the Chávez presidency. If authorities
verify the signatures, then elections will be held mid-year. In the
meantime, the government is seeking new legal procedures to impede the
referendum. By throwing further obstacles into the way, the government
threatens to undermine the incipient economic recovery.
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Delays
in presidential recall initiative but mid-year elections likely
The
National Electoral Council (CNE, Consejo
Nacional Electoral) continues to scrutinize the 3.4 million signatures
gathered by the opposition for a recall referendum over the Chávez
presidency and pro-government legislators gathered from 28 November to 1
December last year.
The process of approving and verifying the signatures is proving
lengthy and CNE officials are likely to overstep the 30-day review
deadline (signatures were submitted on 12 January) but a decision is
planned by the end of this month.
If approved, the CNE has to set a referendum date within 97 days,
which would be in early June.
If President Chávez is recalled in the referendum, new elections
would be held 30 days after the referendum.
In the event of elections, the otherwise politically fractured
opposition has decided to hold primaries to select a candidate for the
presidency rather than present various candidates simultaneously.
In
the meantime, however, the government has received a Supreme Court ruling
that allows simple rather than two-thirds majority approval of organic
laws in the parliament.
The government coalition still holds this majority and could move
to increase the number of Supreme Court justices in an effort to receive a
more favourable ruling on the recall referendum initiative.
Even though the appointment process for new justices is lengthy,
the government’s legal challenge via the Supreme Court shows continued
recalcitrance towards finding a solution to the current political
stalemate.
Currency
trading well above official fixed exchange rate
The
black and parallel market for foreign currency is blooming, with the
currency currently trading between 2,700 – 3,000 bolivares
to the US$ in the unofficial markets.
This means that the US$ is currently trading at a 69% to 88%
premium compared to the government’s official exchange rate of 1,600 bolivares
to the US$.
In its 2004 budget, the government hinted that it might devalue the
currency by 16.7% this year to 1,920 bolivares
to the US$.
However, recent government and Central Bank statements deny that
devaluation will be implemented any time soon.
In addition to the black market, investors have been taking
advantage of a loophole in the current exchange control system, which
enables buying of shares in the national telecommunications company (CANTV,
Compañía
Anónima Nacional Teléfonos de Venezuela) that are tradable for ADRs
and thus convertible to US$.
The so-called “CANTV Dollar” is currently trading at 3,050 to
3,090 bolivares
to the US$ and has become the benchmark of the parallel market.
The majority of Consensus Forecast participants anticipate the bolivar
to be devalued within the first quarter in line with the government’s
budget figure.
The devaluation, however, is unlikely to spur on an inflationary
bout as the announcement that was made late last year has already been
factored into domestic prices.
In addition, the currency is expected to weaken further throughout
the year, reaching 2,617 bolivares
to the US$ by year-end – a 38.9% devaluation compared to the end of
2002.
For 2005, Consensus Forecast panellists see further adjustment with
the currency depreciating 14.4% to reach 3,057 bolivares
to the US$.
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