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EDITORIAL - PetroCaribe and theIMF programme

Published:Tuesday | February 2, 2010 | 12:00 AM

IN THE broad economic programme outlined to the International Monetary Fund (IMF), the Government declared its intention to "continue to draw financing from the PetroCaribe facility", which, on the face of it, makes sense.

PetroCaribe is the scheme operated by Venezuela that allows Jamaica and several other regional countries to pay cash for 60 per cent of their oil imports, while the remainder is converted to long-term, low-interest loans - as low as one per cent. The PetroCaribe Fund, by our estimates, has accumulated about US$1.1 billion since Jamaica joined the scheme in 2005.

But there are important issues raised and discussed about how heavily is the Government's programme with the IMF predicated on the PetroCaribe arrangement and the likely impact on balance of payments and fiscal targets should there be adjustments to the scheme. What if Jamaica were asked to front-load more of its payment for oil?

From a national interest standpoint, this newspaper hopes that PetroCaribe remains and is even expanded. But there are some realities to be faced. Primary among these are the economic stresses being faced by Venezuela and the political pressures President Chávez is undergoing.

In recent months, the Venezuelan currency has been devalued, inflation has risen sharply, and some goods are in short supply. With oil prices not at the stratospheric levels of 2008, President Chávez is finding it hard to keep his supporters happy with the raft of social programmes he initiated, while maintaining his posture of a benevolent interna-tionalist. In other words, Jamaica needs to have a hard-nosed, realistic assessment of the future of PetroCaribe.

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