Am sure PSM went and much talk is being done. We were surprised at Jamaicas muted observance last week of the first anniversary of the death of Hugo Chavez and how little attention we appear to be paying to political tensions in Venezuela. Yet both events matter much to Jamaica, including, this newspaper suspects, the Governments ability to hold together its economic reform agreement with the International Monetary Fund (IMF) - unless the administration is already talking through the issue with the IMF and quietly rallying other international partners. The cold, hard fact that faces Kingston is that Nicolas Maduro, Mr Chavezs successor as Venezuelas president, though a protégé of his late boss, is no Hugo Chavez, who was a charismatic, even if polarising, leader. Mr Chavez was able to keep the vast majority of Venezuelas poor onside and in support of his socialist policies. In the aftermath of Mr Chavezs death, Mr Maduro only narrowly won the presidential election. He presides over a country that is politically unstable, with daily anti- and pro-government demonstrations, and the deaths of more than a score of protesters in recent weeks. Economically, growth has stalled, its fiscal deficit is nearing nine per cent of GDP, its currency is sliding, point-to-point inflation up to January was 56 per cent, and many consumer goods are in short supply. Mr Maduro blames economic and political saboteurs for the troubles. PROFOUND CONSEQUENCES Whatever the merit of Mr Maduros argument, the Venezuelan situation is likely to have profound consequences for Jamaica, whether or not he survives his term of office. For Mr Maduros commitment notwithstanding, it is highly unlikely that the PetroCaribe oil facility can survive in its current form. Should the conservative opposition come to power, it will hardly survive at all. PetroCaribe is the programme, established by Mr Chavez, through which Venezuela sells oil to Caribbean and Latin American countries on a deferred-payment basis. Under the scheme, Jamaica can access around seven million barrels a year from Venezuela, or approximately 31 per cent of the countrys oil import. Importantly, we have to pay cash for only a portion of the imports, the remainder of the bill - up to 70 per cent of the value if the cost of oil is above US$40 a barrel - is converted to long-term, low-interest loans. That translates, analysts say, to more than J$30 billion a year in loans from Venezuela - for which the Government is under no immediate pressure to source foreign exchange. The impact is positive to the current and fiscal accounts, the stability of the Jamaican economy, and, ultimately, the agreement with the IMF. But this deal comes at a price to Venezuela, which the opposition branded as an ideological folly that it cant afford. Mr Maduro might want to maintain PetroCaribe and is likely to do so in some form. He nonetheless faces the pressure of the countrys economic problems, and poor supporters seeking the cushion of the State. In the circumstances, Jamaica must take a realistic view of the situation, beyond whatever assurances may have been offered by Mr Maduro. In that regard, the finance minister, Peter Phillips, if it hasnt happened as yet, must plan for a post-PetroCaribe world, including engaging other partners on how they might help shore up the Jamaican economy.
Posted on: Sun, 09 Mar 2014 13:41:58 +0000
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