FXStreet (Córdoba) - According to analysts from Brown Brothers Harriman the opposition victory in Sunday’s election in Venezuela is a potential game changer but the economic challenges and adjustments lie ahead. Key Quotes: “The opposition victory in Venezuelan congressional elections this past weekend could eventually herald a new post-Chavez order. However, it’s way too early to celebrate. Severe economic challenges and adjustments lie ahead no matter what, made worse by the continued slide in oil prices.” “Decades of policy mismanagement coupled with low oil prices have left the economy in tatters. This finally took a toll on the ruling party, similar to what happened recently in Argentina. GDP is expected to contract -10% this year, and follows a -3% drop in 2014. For 2016 and 2017, the IMF forecasts -6% and -2.5% contractions, respectively.” “Venezuelan bonds have rallied in the wake of the surprise opposition victory. However, we think the rally is overdone in light of still-plunging oil prices. With reserves at multi-year lows and still sinking, the risk of default is not insignificant. “ “The official bolivar rate of VEF6.3 per USD is unsustainable. A new rate more in line with the black market rate of 909 currently needs to be put in place. Within the three-tiered system that was last tweaked in early 2015, the SICAD (currently around VEB13.5 for priority sectors) rate and SIMADI rate (currently around VEF200 for non-priority sectors) are also too strong. Any serious effort at FX reforms would have to see a unification of all the rates closer to the black market rate.” For more information, read our latest forex news.