Leader of the Opposition Arnhim Eustace is convinced that the outlook is dim for PetroCaribe, Venezuela’s oil alliance, which sees several Caribbean nations, including St. Vincent and the Grenadines, purchasing fuel on terms of preferential payment.
“If there is no bright future for Venezuela, there is no bright future for PetroCaribe…” said Eustace, an economist, noting that falling oil prices are negatively affecting Venezuela’s economy.
He said that Caracas has already decided to reduce its budget, and pointed out that oil represents 96 per cent of Venezuela’s exports and generates 58 per cent of its revenue
“Venezuela is short of cash,” Eustace said, and accused Prime Minister Ralph Gonsalves of ignoring the situation.
“Gonsalves could bury his head in the sand as much as he wants, as the proverbial ostrich. The fact remains that Venezuela, who has been generous in the loans to us, is now in trouble,” Eustace said.
He said that Venezuela cannot continue PetroCaribe in the current circumstances.
“What are they going to maintain it with?”
Caracas late last year reaffirmed its commitment to the initiative but has since moved to sell some of the PetroCaribe debt at deeply discounted rates.
“Why is Venezuela selling the debt at such a big discount,” Eustace said, mentioning the Dominican Republic, where the US$3.5 billion debt was reportedly sold for US$1.5 billion.
“Just imagine that. You lose two billion. Things have to be bad for you to sell a debt at that low price.”
Eustace said Jamaica has reported that it too has been approached to sell its PetroCaribe debt.
“I want the people of St. Vincent and the Grenadines to understand [that] when Venezuela sells any of that debts that any country owes, … we still have to pay the loan from the persons who has bought the loan. … We still have to pay back the original amount. … What is worse, they will not be as generous to us as Venezuela was,” Eustace said.
“If things weren’t so difficult, why would President Maduro take a tour at this time? In an effort, the release says, to get oil prices to come back up,” Eustace said, in reference to international media reports about Maduro’s recent visit to China and OPEC nations.
“Because he realises that he is being caught in a serious bind. The economy is caught in a serious bind,” Eustace said.
“I am not going to bury my head like an ostrich in the sand on this matter, like Gonsalves is doing. We must face the reality of the condition that Venezuela faces and prepare for the necessary adjustments we have to make in our own economy,” Eustace said.
He, however, pointed out that low oil prices will benefit Vincentians consumers, including lower surcharge on electricity and make the economy more competitive.
“But you still have to pay your debt too,” Eustace said.
“… it is clear what is happening in Venezuela. The country is in recession; it cannot continue to give generous concessions. It has to balance its owns budget, it has to meet the needs of its own population, it has less money to be generous to us, and we too much recognize that, because the loan we used to get was on soft terms, 1 per cent over 20 year, that’s generous,” Eustace said.