Venezuela Presidential Recall
Venezuela Presidential Recall

CARACAS - Venezuela's Supreme Court on Wednesday allowed President Nicolas Maduro to put forth the country's 2017 budget without going through the opposition-led National Assembly, breaking a constitutional obligation.

The opposition is vying to unseat Maduro as Venezuela wrestles with a deep economic crisis that has food running short and inflation in triple digits. It accuses the leftist government of undermining the legislature to strengthen its grip on power.

In the latest institutional struggle, the Supreme Court said in a statement that the president would be able to present the budget to the court's Constitutional Chamber, bypassing Congress.

The court based its decision "on the need to complete the legal formation of the national budget ... with the aim of maintaining the state's functions, guaranteeing fundamental rights and constitutional order."

The opposition swiftly condemned the decision, which also bars the National Assembly from tweaking or objecting to the budget.

"If the government approves the budget itself, that budget is null. Whoever allows or authorizes an expense will be punished," said lawmaker Jose Guerra on Twitter.

The development could spook some bondholders looking to participate in an ongoing debt swap with state oil company PDVSA.

"We believe that there would be a strong legal argument for a future administration to state that debt contracted in 2017 would not be valid given the lack of an Annual Indebtedness Law approved by the National Assembly," said Francisco Rodriguez, chief economist at Torino Capital LLC, in a note to clients this week.