Venezuela Opposition Wins Parliament Majority, Blow to Leftist Regime

Venezuela’s opposition alliance won a majority in Congress for the first time in 16 years in elections on Sunday as an unprecedented recession and a collapse in the bolivar turned voters against the populist policies of President Nicolas Maduro.

The exact size of the majority had yet to be determined. Preliminary results gave the opposition at least 99 seats of the 167 up for grabs in the National Assembly, while the government’s ruling socialist party took at least 46 seats, electoral council president Tibisay Lucena said early Monday on state television. A total of 22 seats are still to be awarded, with 96 percent of votes transmitted, Lucena said.

The vote represents a rejection of the policies that have seen hundreds of companies seized by the state, fueling the world’s fastest inflation and stoking shortages of essential items. A qualified majority of three-fifths or two-thirds would grant the opposition even more powers to challenge Maduro.

“Change has started in Venezuela,” opposition leader Jesus “Chuo” Torrealba said at a press conference in Caracas early Monday. “The opposition now needs more unity, and we will be more unified.”

Maduro, who spoke on state television after the numbers were released, acknowledged what he said should be a “wake up call.”

“We have come with our honor to recognize these adverse results, to accept them and tell Venezuela that the constitution and democracy have triumphed,” Maduro said. “We accept the results just as they have been announced by the electoral body.”

Bonds Rally

Government bonds due September 2027 rose 2.54 cents to 44.66 cents on the dollar in early trading. The country’s dollar bonds could rise or fall as much as 15 percent if the vote opens the way to economic reforms, or leads to a political crisis and policy paralysis, Bank of America Corp. said last month.

The election “should be positive for bond prices which reflect growing confidence of investors in a turnaround,” said Marco Ruijer, who oversees about $7 billion of emerging-market debt as a money manager at NN Investment in The Hague and is overweight Venezuela bonds. If the opposition wins a two-thirds majority, Ruijer said he will look for policy changes including a devaluation of the bolivar and an increase in gasoline prices.

Voter Turnout

Participation in the election was about 74 percent, said Lucena of the electoral council. The new lawmakers will take their seats on Jan. 5.

Fireworks and sirens were set off in the eastern Chacao municipality of Caracas immediately after the results were announced. Crowds gathered around the Altamira neighborhood in the capital, many singing songs and crying in celebration.

Venezuela’s economy is expected to contract 10 percent this year by the International Monetary Fund, while economists polled by Bloomberg see inflation of about 124 percent.

“The news is pretty positive,” said Paul McNamara, who oversees $4.5 billion in emerging-market bonds as a money manager at GAM UK Ltd. in London. “The current government is doing more or less everything wrong at the moment in terms of maintaining a viable economy. So the hope is that the new Congress will be able to get them to do a bit better."