Despite the economic problems, one of the world’s highest inflation rates and soaring crime, Venezuelan President Hugo Chavez will more likely win re-election in October than not, according to Credit Suisse, the second- biggest Swiss bank.
“We think there is a greater than 50 percent chance that President Chavez will be reelected,” it says in a research paper today.
The reason? Massive fiscal and monetary expansion, which should increase economic growth.
However, that same expansion is expected to result in higher inflation and a wider fiscal deficit in 2012. Credit Suisse believes that the gap “should be comfortably covered with bolivar and dollar denominated debt sales and accumulated fiscal assets.”
The government and state oil company PDVSA will likely sell a combined $10 billion or $12 billion in dollar-denominated bonds this year, Credit Suisse says, quoting local economists in Venezuela.
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