September 16, 2014
Eustace calls on Government to reassess PetroCaribe agreement

The Leader of the Opposition has made a call for the Government of St Vincent and the Grenadines to reassess the arrangement under the PetroCaribe agreement.{{more}}

During the New Times radio programme yesterday, Opposition Leader Arnhim Eustace noted that he has been hearing comments coming from analysts who are questioning how long PetroCaribe can continue, given the current declining state of Venezuela’s economy.

“PetroCaribe is something that we have to keep our eyes on,” the Opposition Leader said, while outlining the terms of the agreement.

Member countries of PetroCaribe are allowed to purchase oil and pay some of the costs, while keeping back a portion of payment in the form of a loan, which can be paid over a 25-year period at a 2 per cent interest rate, Eustace explained to listeners.

“That is very attractive to Government. It reduces the need for them to be more prudent, more disciplined in spending financially,” Eustace said.

“Governments jump at it, they take it and down the road, they’re faced with the question of repayment. A lot of that will depend on how well the Venezuelan economy is also doing.”

Eustace declared that governments should be aware of the repercussions if the agreement is suddenly dissolved and advised them to begin to assess other possibilities.

“There are sections in the agreement which allow for Venezuela to change the nature of the PetroCaribe by giving 30 days notice,” he said.

“Therefore, what governments who are participating need to be aware of, in case the worst happens and PetroCaribe has to go. They’re not saying it’s going to go now. They are saying the signs are there and we have to take warning.”

The Opposition Leader added that the Government of St Vincent and the Grenadines has become dependent on the money that is kept back from PetroCaribe through the 25-year loan instrument and noted that the time will come for the loans to be paid back.

While noting that Venezuela’s oil production has fallen by 30 per cent over some years and that their currency is low in comparison to the US dollar, Eustace questioned whether the South American country can afford to maintain PetroCaribe or if they will tighten operations.

“If they tighten up, what are we going to do? We are already running a fiscal deficit without it. The debt to PetroCaribe from St Vincent alone now is over $55 million. If you not allowed to have that anymore, what’s going to happen? Your budget will show even greater deficit than it’s showing now and therefore, as a government, one has to take these matters into account day by day,” Eustace said.

“I am urging the Government again to look closely at PetroCaribe. Let us not get fooled. This thing is generous now. It is going to tighten later. The circumstances in Venezuela indicate that the economy is in deep trouble.”(BK)