The price of oil on the World Market continues to fall and while that is a good thing for those countries whose Governments pass on the savings at the pump, it is also cause for concern for some on the global scale. The tumbling oil prices are draining hundreds of billions of dollars from the coffers of oil-rich exporters such as Venezuela, which sits on the World’s largest Oil reserves, and if the trend continues, it may be a matter of time for Belize to feel the effects via the Petrocaribe fund.
The price of oil has declined about 40 percent since its peak in mid-June and Venezuela was one of those countries calling on OPEC, the Organization of the Petroleum Exporting Countries , to stop the prices from falling. However, OPEC voted to continue to pump at the same rate. According to reports, Venezuela is now trying to raise cash by selling debts owed to it by the Dominican Republic and Jamaica via the PetroCaribe Initiative to the US Wall Street investment bank Goldman Sachs.
Three countries – the Dominican Republic, Jamaica and Nicaragua – together account for $10 billion of the $14.5 billion U.S total owed to Venezuela under the 18-country PetroCaribe program. If Venezuela were to securitize all of the past PetroCaribe debt, that would bring in a total of $6 billion US at a loss of 8.5 billion dollar US loss to Venezuela. Cancelling the program completely would provide the equivalent of another $3.6 billion US a year; but at a summit last week, Venezuelan Foreign Minister, Rafael Ramirez, told representatives from PetroCaribe countries that his government would continue the initiative under any circumstances. If Sachs were to buy the debt, those three countries would put up a bond and service the replacement bond immediately.
Nothing has been said about Belize’s loan in the midst of these negotiations. According to the Belizean Government, Belize’s PetroCaribe loan is at $ 220 million US dollars, compounded at one percent annually and they say that the Pertocaribe programme is sustainable. APBEL representatives also say that since the price of crude has decreased, Belize will need to make larger up-front cash payments for shipments of oil from Venezuela while the financed portions, which include the loans, will be restricted to smaller amounts until the oil prices increase again.