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IMF concerned about impact of PetroCaribe’s likely collapse on Caribbean

Last Updated on Wednesday, 19 November 2014, 22:02 by GxMedia

Advisor in the IMF’s Western Hemisphere Department, Elie Canetti

The International Monetary Fund (IMF) says it is very concerned about the future of the PetroCaribe concessionary oil-deal in the wake of Venezuela’s deteriorating economy and falling international oil prices.

Several Caribbean countries have signed energy accords with that Latin American country.

Voicing the concern late Tuesday afternoon was Advisor in the IMF’s Western Hemisphere Department, Elie Canetti at a media briefing at Cabinet room in St Vincent and the Grenadines..

Canetti, who is heading an IMF team to the country on an Article 4 consultation, said Venezuela is hugely dependent on its oil sales. With the price of oil dropping from around US$115 per barrel to US$70 per barrel, he says this deepens concerns.

Addressing the potential impact on Caribbean States in the event of a Petro Caribe collapse, Canetti referred specifically to the Eastern Caribbean country of St Vincent and the Grenadines.

He said the State-owned electricity supply monopolist St Vincent Electricity Services Limited (VINLEC) has alternatives and he was assured that finding an alternative supply of fuel was, at best, a minimal concern.

 But, the major concern, the IMF official says will be the fiscal impact because of yhe loss of what is seen as a generous energy agreement between St Vincent and the Grenadines and Venezuela.

The IMF wants to know the type of projects that PetroCaribe’s funds are being spent on.

Canetti says there will have to be some thinking about how to replace the financing of projects from the those concessions if those concessions were to be lost.

Meanwhile, St Vincent and the Grenadines Prime Minister Dr Ralph Gonsalves says that the arrangement with Petro Caribe Agreement is triggered if the price of oil rises above US$50 per barrel.

He says that at US$75 per barrel it is clear that the extent of the country’s indebtedness is far less than when it was one hundred and fifteen dollars US$115 per barrel and therefore Venezuela has less of a burden because of the smaller sum.

The Prime Minister acknowledges that that the deteriorating economic situation in Venezuela is part of the consideration.

The Vincentian Prime Minister is scheduled to attend a ministerial council meeting on energy in Caracas, Venezuela on Thursday.