The Venezuelan government plans to increase the interest rate it charges to finance oil purchases by Central American and Caribbean countries under the Petrocaribe oil agreement, according to reports.
The online financial news agency Platts said the proposed increase comes in the wake of higher administrative and maintenance costs of the loans.
Seventeen Caribbean and Central American countries are currently benefiting from an annual interest rate of between one and two percent. The Petrocaribe oil agreement was initiated in 2005.
Platts said the rate will rise to 2.4 percent in October, a month after a meeting of heads of state and government of Petrocaribe member-countries.
While Jamaica’s Energy Minister Phillip Pauwell said he was unaware of the latest development, Gregory Mair, the opposition Jamaica Labor Party’s (JLP) spokesman on energy, said he was not surprised.
“Because of the precarious financial situation that Venezuela is in, I’m not surprised,” he told reporters.
“But what is of real concern is what we could see in the future – a tightening of the terms and conditions of the Petrocaribe agreement, meaning that they could reduce the credit lines and probably we would have to find more U.S. dollars to pay them on a monthly basis, which would put more pressure on the foreign exchange rate for us here in Jamaica,” he added.
Member-countries can buy oil or refined products from Venezuela at favorable rates, and through a long term financing agreement at low interest rates, under the Petrocaribe agreement,
Members of the agreement are: Antigua and Barbuda, Honduras, Bahamas, Jamaica, Belize, Nicaragua, Cuba, Dominican Republic, Dominica, St. Kitts and Nevis, Grenada, St. Vincent and the Grenadines, Guatemala, St. Lucia, Guyana, Suriname and Haiti.