Reprinted from Caribbean Net News
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Standard and Poor's trims Venezuela credit outlook
01-12-2007

NEW YORK, USA (AFP): Standard and Poor's Thursday marked down its credit outlook for Venezuela a day after the Latin American country's president, Hugo Chavez, promised to expand his socialist agenda.

Venezuelan shares plunged this week after Chavez said Monday he would seek legislative approval for the "mother of all revolutionary laws" giving him the power to nationalise the energy and telecommunications sectors.

The international ratings agency said that it had revised its outlook on Venezuela down to "stable" from "positive", while affirming its long-term "BB-minus" rating on Venezuela's currency, the bolivar.

Such a rating suggests foreign investors might be at risk to ongoing uncertainty and adverse economic conditions.

"The outlook revision comes after the inauguration of President Hugo Chavez and the swearing-in of his new cabinet at which time he announced sweeping plans to establish greater government control over the economy," said Standard and Poor's credit analyst Richard Francis.

Chavez, a former paratrooper in power since 1999, was sworn in Wednesday for a new six-year term and has said he wants to amend the country's constitution to abolish term limits on presidents.

Francis also noted that Chavez had announced a constitutional amendment to strip Venezuela's central bank of its autonomy.

"The year ahead will prove pivotal to what direction the government takes in the next six years, and will therefore be key to any future rating action," Standard and Poor's said.

Foreign direct investment has fallen under the past five years of Chavez's rule, to around an average of two billion dollars annually, but the government has estimated assets of around 45 billion dollars, according to S and P.

Chavez has pursued populist programs since taking power, making literacy and healthcare top priorities as state coffers have been swelled by high prices for Venezuela's oil exports.