Chavez is keen to expand the social programmes that have marked his tenure [Reuters]

Hugo Chavez's victory in Sunday's referendum on term limits for elected officials appears to have reinforced the Venezuelan president's hold on power, but a looming economic crisis is overshadowing celebrations.

The Venezuelan leader has built his popularity on his massive social programmes to help the poor, but they are under threat from a global economic crisis and the plummeting price of oil.

"There will be a severe impact on the Venezuelan economy and we don't know how long it will last," says Edgardo Lander, a former social science professor at the University of Central Venezuela.

Oil revenues account for more than 90 per cent of Venezuela's national income and the price of a barrel has slumped to $40 from a peak of almost $150 last year.

Inflation has rocketed 30 per cent, the highest in Latin America, and analysts predict that the economy could contract by more than four per cent this year.

"A lot of tough decisions will have to made," Lander says of a Chavez government that will face re-election in 2013.

Honeymoon period?

"The Chavez revolution has a free hand now to take important decisions," says Luis Vicente Leon of the Datanalisis polling firm.

Chavez could decide to tackle inflation, possibly by devaluing the Venezuelan currency, the Bolivar, reports say.

But many agree he is unlikely to make any cuts to the social programmes where billions of dollars have been pumped into health and education services.

"He needs to maintain his link to the people," Leon says.

Funding issues

Augusto Monteil, a national assembly member from Chavez's United Socialist Party of Venezuela, says a likely immediate impact of the "yes" win in Sunday's referendum was that the programmes could even be expanded.

But he also admits there could be less funding available for the programmes during a time of crisis.

"If the national budget is diminished then of course there will be less, but the percentage will remain the same," he says.

The government has said it will rely on its massive reserves, estimated to be at least $64bn.

But the opposition, defeated in Sunday's referendum, warns that a reliance on spending national savings carries its own risks.

Teodoro Petkoff, the editor of Tal Cual, an opposition magazine, says that "the government is using its reserves because it believes that oil price will recover - but if that doesn't happen we will have a real problem".

Spending projects

The spending projects have made Chavez a popular leader in Venezuela [EPA]

He announced plans to spend an additional $225bn by 2013 on more than 200 projects, including a new national railway and an expansion of the Caracas subway system, the Associated Press reported.

The government has also begun distributing $5bn in loans to businesses, community councils and co-operatives to build infrastructure, housing and other projects.

Monteil says this announcement shows that Chavez's plans are very likely to continue as before.

"The philosophy of the government will not change," says Monteil.

"Even during an economic crisis."