The government is seeking to change the terms of the Petro-Caribe deal to allow for the money saved to be used for investments, rather than used directly for social programmes.
Prime Minister Gaston Browne said he spoke to Venezuelan President Nicolas Maduro to have the deal change as the current arrangement is “literally killing the money” as it doesn’t generate any extra funds.
Under the Petro Caribe arrangement, only 60 per cent has to be paid upfront for oil purchased. The remaining 40 per cent is converted into a concessional loan to be repaid over a 25-year period at a 2 per cent annual interest rate. The savings made are used to fund social programmes.
“I’ve arranged for a little restructuring of the facility, in which going forward that we are going to possibly utilise those receivables for investment purposes. So instead of spending the funds on social projects directly, you invest the proceeds and then you utilise the returns on the investments to fund the social programmes,” Browne said. The prime minister said he had reached an agreement, in principle, with Maduro.
Meanwhile, Browne said the debt accumulated under the initiative has reached $375 million.
He said the debt represents a major burden for the government and accused the former United Progressive Party (UPP) administration of using accounting tricks to keep it off the government’s books.
“They did not issue the promissory note, as a result that debt is just hanging as though it does not exist. But the reality is the funds have been utilized. The monies are owed, and it has to be repaid. That debt alone represents at least 11 to 12 per cent of GDP,” Browne said.
The prime minister has repeatedly accused the former administration of “clandestinely” underplaying the true debt to GDP (Gross Domestic Product) ratio, which he says is actually around 125-130 per cent and not the official figure of 100 per cent.
He said the $100 million debt to Half Moon Bay Holding Company should be on government’s books, but is not, along with US$100 million loan taken to upgrade the airport ahead of the 2007 Cricket World Cup.(More in today’s Daily Observer)