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

QuickTake Venezuela

The opposition won a qualified majority of 107 seats -- or 64 percent -- of the 167-seat National Assembly, while the government’s ruling socialist party took 55 seats, the Electoral Council said on its website Monday. A three-fifths majority could give the party the power to censure top officials, push to recall Maduro, or otherwise challenge policies that have fueled the world’s fastest inflation and stoked shortages of essential items.

With five seats still undecided, the opposition was just four votes shy of a two-thirds majority that would give them widespread power, including the ability to call a Constituent Assembly to change the constitution.

Venezuelans celebrate election results Photographer: Wilfredo Riera/Bloomberg

The economy is expected to contract 10 percent this year by the International Monetary Fund, while economists polled by Bloomberg see prices rising about 124 percent. Still, the opposition will struggle to overturn policies because Maduro remains president until 2019 and the Supreme Court and central bank are packed with his appointees.

“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.”

The result deals another blow to the bloc of left-leaning leaders ushered into power in South America, following Hugo Chavez’s election in 1999. The opposition won Argentina’s presidency last month, ending 12 years of rule by President Cristina Fernandez de Kirchner and her late husband, while Brazilian President Dilma Rousseff is facing impeachment procedures while the economy contracted 4.5 percent in the third quarter.

‘Wake Up Call’



Maduro, who spoke on state television after the election results were released, acknowledged what he called 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.”

The price of Venezuela’s benchmark 9.25 percent securities due in 2027 rose 2.58 cents to 44.7 cents on the dollar at 9:24 a.m. in New York, the biggest increase since June. The yield on the securities fell 129 basis points, the biggest decrease on a closing basis since Aug. 27, to 23 percent.

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 at NN Investment in The Hague and is overweight Venezuela bonds.

If the opposition wins a two-thirds majority, Ruijer said he would look for policy changes including a devaluation of the bolivar and an increase in gasoline prices.

One Way or Another

The opposition’s strong showing makes economic reform more likely, “either as a result of a change in government or of pressure on the current administration to change its economic policies,” Bank of America Economist Francisco Rodriguez, wrote in research note.

Participation in the election was about 74 percent, Electoral Council President Tibisay Lucena said Monday on state television. The new lawmakers take their seats 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.

“The news is pretty positive,” said Paul McNamara, who oversees $4.5 billion in emerging-market bonds 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."

— With assistance by Lyubov Pronina, and Ksenia Galouchko