More Fiscal Deficits Ahead

BMI View: We believe more robust oil prices will lead to an uptick in government revenue and a significant improvement in Venezuela's nominal fiscal deficit in 2010 and 2011. While we forecast the fiscal shortfall to decrease from 6.9% of GDP in 2009 to 2.7% and 1.5% in 2010 and 2011 respectively, we caution that a fifth (and sixth) consecutive fiscal deficit bodes ill for the country's sovereign risk rating over the medium term.

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