(Jamaica Gleaner) The Chief Executive Officer (CEO) of the PetroCaribe Fund, Dr Wesley Hughes, says any increase in the interest rate charged on oil purchases under the agreement will contribute to an increase in Jamaica’s debt payments.
According to Venezuelan media reports, starting October, the Government will increase the interest rate on payments between two and four percentage points.
Since PetroCaribe was created in June 2005, 17 member countries have been paying an annual interest rate of between one per cent and two per cent.
Hughes said he was not aware of the reports, but said Jamaica and other regional countries making oil purchases would still remain on a concessional basis, albeit on a lower level.
Hughes says even with the reported increases, it would still not be worth it to purchase oil on the open market.
News reports say the decision to increase the rate from two to four per cent is to finance higher administrative and maintenance costs of the loans.
Under the Petro Caribe agreement, members can buy oil or refined products from Venezuela at favourable rates and through a long-term financing agreement at the low interest rates.
Questions about the viability of the agreement have been raised following the death of former president Hugo Chavez in March and tough socio-economic problems confronting Venezuela.