Posted by hougansydney.com on Monday, March 23, 2015 Under: Economy
The continued drop in oil prices on the international market continues to mortgage the future of Petrocaribe and some members of this agreement are found more vulnerable than others. The revised budget for the 2014-2015 fiscal informs Haiti, just for the first quarter of this year, recorded a shortfall of more than 10 billion gourdes, or less than 49% of expected revenues.
The signals announcing the death knell for PetroCaribe are becoming more louder. The results are beginning to be known, the books for distribution. And, not surprisingly, Haiti, for failing to effectively manage its debt, is among the worst students in 18 countries of Petrocaribe. Wednesday, Barbados, during a press conference, the Deputy Director of the Western Hemisphere International Monetary Fund (IMF), Adrienne Cheasty, said that Haiti and Nicaragua are the two countries associated with Petrocaribe most affected by the global decline in oil prices.
"The oil price fall is more complex for the members of Petrocaribe as for oil-importing countries," said Cheasty, who was speaking on the impact of the oil price fall on related countries through Petrocaribe Agreement . She recalled that some experts even wonder if this regional program should continue.
With a barrel of oil that revolves around a $ 50 USD these days, half of what it was in June, saying that Venezuela, fully dependent on its oil exports still account for 96% of its income is on his toes to use an understatement. An inflation rate brushing against the 68% poverty rate among the highest in the region and a scarcity of basic necessities complete the picture. In this cleavage then, the paris are already open to find out how long Venezuela will manage to keep alive PetroCaribe.
Indeed, the program has become too expensive for a country reeling from political instability and major economic challenges. The loss of revenue for Venezuela as part of this program is approximately 400,000 barrels per day, or $ 20 billion per year. Add to that the $ 28 billion that the country provides in terms of domestic oil subsidies.
Thus, according Cheasty, Guyana, the Dominican Republic and Jamaica will be less affected because their governments are financially prepared to respond appropriately to this change. Instead of Nicaragua and Haiti that will be hardest hit, because they do not have large reserves and a robust domestic financial market.
The Dominican government announced on 27 January that he bought, with sovereign bond funds, 98% of its debt, estimated at about $ 4 billion accumulated until December 2014 and incurred in connection PetroCaribe. To believe the Dominican leaders, this financial transaction allowed the country to save $ 550 million, a reduction achieved on the nominal value of the debt by 52% or equivalent, in the amount of 48% paid for debt.
According to Barclays, Jamaica is about to perform a similar transaction with Venezuela, for which Venezuela would receive between 1.6 and 1.8 billion.
In this sense, the economist Kesner Pharel, CEO of Group Growth, think this is the best time to Haitian leaders to sit down with their Venezuelan counterparts to negotiate debt. For the latter, it would be an operation of any benefit for Haiti that would pay cash part of its debt and would remove a thorn in his feet for the next 25 years.
For now, if PetroCaribe should end, some countries would be much more exposed than others. For Jamaica, Guyana, Nicaragua and Haiti, the value of preferential financing for Venezuelan oil imports is more than 10% of their revenue and amounts to about 4% of GDP.
Petrocaribe was created in 2005 at the initiative of the late President Hugo Chavez, in order to provide fuel for member countries to favorable payment terms. Each member has a distinct energy cooperation agreement, but the terms are broadly similar. Agreements may be canceled or modified with just 30 days notice, cutting the flow of new financing and forcing countries to pay market rates. Even with this program, the cost of electricity Caribbean remain very high.
In : Economy