PetroCaribe debt reaches $25b
Published by www.jamaicaobserver.com on Sep 03, 2007
Sep 04, 2007

The Jamaican government racked up US$362 million (J$25 billion) in loans under the PetroCaribe Agreement over the 18 months to July and has already disbursed 60 per cent of the loan receipts to public projects and entities, despite having not created the oversight body that will oversee the fund.

"Parliament has authorised the creation of the Petrocaribe Development Fund to manage the inflows to Jamaica," said Energy Minister Phillip Paulwell in his address to the PetroCaribe Summit held in Caracas, Venezuela on August 11. According to the minister the Fund will also "provide financing for approved projects and to ensure that the obligations to Venezuela are met as they fall due".

But Paulwell told the list of dignitaries at the South American conference the state's "activities in establishing the Fund must be viewed as 'work in progress' as we seek to resolve a number of issues and to improve the social impact of our expenditure".

"A major challenge," he said, "is how to facilitate ongoing direct investments in upgrading human capital, and in improving the welfare of the poor.

In the meantime, the debt operations are overseen by a "board of management comprising senior officials in the public service", which provides loans on favourable terms to the finance minister and to enterprises within the public sector.

"Our success will depend on the extent to which the Fund can continue to manage its loan and investment portfolio effectively, and also the success of the projects which are being financed, in expanding economic opportunities and overall growth of our economy,"
he added.

So far, 60 per cent of loan receipts have been disbursed to projects and entities as at the end of July 2007. Approximately 30 per cent of loan resources was allocated to emergency road repairs following Hurricane Ivan and a series of floods, and investments in upgrading and expansion of the ports, according to the minister.

Another 30 per cent of loans has provided low cost financing to development banks, and other public entities which are engaged in the delivery of essential services to the poor and providing a livelihood for members of this group.
"Support, in this regard, has been in the area of public transportation and agriculture, particularly to the sugar industry, which is the largest employer of unskilled labour," Paulwell added.

The agreement was signed in June 2005 and allows Jamaica to convert 40 per cent of purchase payments for the 23,500 barrels-a-day of oil imported from Venezuela, into a long-term soft loan.

The facility kicked in last February, which means that the state has been building up debt at a rate of US$20 million (J$1.4 billion) a month.