Now, the government is taking emergency measures to get its finances under control. The Central Bank is imposing exchange controls to protect Venezuela's foreign reserves, which have plunged to $11.2 billion because of lower oil revenues and efforts to defend the Venezuelan currency. The bolivar lost 25% of its value in January alone. But the economy will remain under strain, since it will take weeks to get oil exports back to normal. J.P. Morgan Chase estimates the economy will shrink 17% this year.
Meanwhile, the weakened opposition is still hoping Chavez will bow to international pressure for a constitutional amendment shortening his six-year term or an early referendum on his rule. A group including Brazil, Chile, Mexico, Portugal, Spain, and the U.S. is attempting to broker a compromise. But since Chavez is unlikely to budge, Venezuela's political divisions and economic pain seem set to continue. By Stephen Ixer in Caracas EDITED BY Edited by Rose Brady