Keen to avoid measures that look like "neoliberal" austerity, the government is doing its best to disguise and delay the necessary fiscal and monetary steps. But it has doubled an airport departure tax and the fees charged by public notaries. More tax rises (including in VAT, now at only 9%) seem bound to follow. Foreign currency allowances for travellers are being cut, while more importers are finding that they have to resort to the parallel exchange market to obtain their dollars.

Devaluation would help pay the bills, at the cost of a further spike in inflation, but the government is likely to stick to the longstanding (and overvalued) official rate of 2.15 bolívares to the dollar as long as possible. The state oil company is reported to be surreptitiously selling some of its dollars on the illegal parallel market (at a rate of around five bolívares).

Since much oil is presold, the recent plunge in its price will start to be felt in earnest only this month. That is when Venezuela will start to feel a cold draught from the slowdown in the world economy. But with so much hanging on the referendum result, the president will do his utmost to cushion the immediate impact. That will almost certainly include raiding the reserves to help balance the books.

Exactly 20 years ago, faced with a similar drop in oil prices, Venezuela's then-president, Jaime Lusinchi, postponed austerity measures in a successful bid to get his party's candidate, Carlos Andrés Pérez, elected president. Mr Pérez found himself obliged to impose drastic spending and subsidy cuts, which led to riots and looting in which hundreds died. Ironically, Mr Chávez traces the start of his "revolution" to that moment.

... contd.