S&P downgrades Venezuela citing policy ‘radicalization’

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WASHINGTON – Standard & Poor’s cut Venezuela’s credit rating by one step to B- on Friday and put the country on watch for another downgrade, citing the “growing radicalization of economic policy.”

“We expect the results of the December 8 municipal elections to reinforce the recent trend toward more government intervention in the economy, creating greater uncertainty,” S&P said.

S&P said it foresees the continuation of “erratic” economic policies by the government of Nicolas Maduro, seven months after he took the presidency following the death of socialist strongman Hugo Chavez, whom he had worked closely with for years.

S&P pointed to a sharp rundown in the country’s international reserves over the past two months as the government tries to get inflation under control with price-control programs.

That has left Venezuela even more dependent on oil income, and weakens the government’s ability to endure any financial shocks, the agency said.

“The recent political shift overturns an earlier initiative that had taken place in mid-year to introduce more pragmatic economic policy,” it said.