As Minister of Finance, The PM is also closely monitoring the Petrocaribe situation. International financial news reports say that Venezuela is being forced to securitize the 3.5 billion dollar a year Petrocaribe debt.
This basically means that they would sell the debt to Wall Street investment banks - and those countries that owe Venezuela would then have their debt transferred to various international investment banks like Goldman Sachs. It is a dramatic realignment of the pro-poor programme, but Venezuela is being forced into it because plummeting world oil prices have cut sharply into Venezuela's domestic earnings. So, it basically has to sell the debt - at deep discounts - to raise money.
Initial reports are that the debts to be securitized are the ones owing by Jamaica and the Dominican Republic - which are in the billions of dollars, compared to Belize's far smaller debt which so far is at a few hundred million dollars.
But, even in Belize, the programme will be cut back - the Prime Minister explained how today:..
Jules Vasquez
"Sir, are you concern about the latest news that there is a move of it to securitize the PetroCaribe debt?"
Prime Minister Dean Barrow
"What I am concern about is that, I don't know if you'd been told, but poderosa has indicated that they will not any longer be able to supply us with premium, I think starting either now or at the end of the year. So in effect that is a cut back of the program. I believe that the amount of premium is only like 15% of the total volumes that we get. But it clearly represents a roll back and I have indicated on the last occasion, I utterly and completely understand. What we will do, to try and make up some of that 13%- 15% loss, whatever it is, is to have government vehicles only use regular. In terms of the securitization, it doesn't matter to me who we pay back to."
Jules Vasquez
"Under the plan, you can pay with rice theoretically."
Prime Minister Dean Barrow
"But we haven't. We've been paying cash and it's taken us a while to work out the bartering thing and so if we can't work it out now, it's not a big deal. We are happy to service the debt by a way of cash."
Jules Vasquez
"And if they were to securitize it, I can't imagine the new owner of the debt would be agreeable to a 1% interest rate which is what it currently is at."
Prime Minister Dean Barrow
"Well, we will have to see what the deal is with that sort of thing. Clearly there are changes and I am saying that we are prepared to deal with the changes. It has been a lovely run. If it comes to an end, certainly it's in its current form, we will roll with the punches."
The difference between regular and premium fuel is the octane rating. PETROCARIBE Premium is around 90.5, regular 89.
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