A gathering economic storm means that the president cannot count on remaining popular. Mr Chávez insists that his "21st-century socialism" means Venezuela will avoid the recession. "Not the slightest gust of wind has touched us, while Europe [and America] are being battered by storms," he said this week. But independent analysts are much less sanguine.

Despite his talk of "endogenous development" and economic diversification, Venezuela is more dependent on oil now than it was when Mr Chávez took power. Oil brought in 92% of export revenues in the first nine months of 2008, compared with 64% in 1998. The 2009 budget, which foresees public spending of $78 billion, assumes an average oil price of $60 a barrel (and economic growth of 6%). Venezuelan crude, much of which is heavy (meaning viscous), currently sells for around half that figure. The budget also assumes that Venezuela produces 3.4m barrels of oil per day. Independent sources, including OPEC, say output is about 1m barrels less.

Although the budget involves a nominal increase in spending of 23%, in real terms it involves a contraction. In the past few years, the government has spent heavily off-budget, on infrastructure and other projects. It will find that harder this year. When pressed to explain how it intends to pay this year's bills if the oil price remains low, officials say that they can draw on up to $100 billion in international reserves and money in various discretionary funds. The Central Bank's reserves are around $38 billion; the government has siphoned tens of billions more into an unaudited National Development Fund, and other off-budget places. But quite how much these funds contain is unclear.

... contd.