‘Gov’t Being Deceitful’ – Shaw on PetroCaribe Buy-back

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Deception!

That’s how the Opposition JLP is describing the government’s defense of the Petrocaribe debt buyback deal.

The Ministry of Finance issued a press release after 8-last evening, confirming that the transaction is a done deal.

The statement also says that Jamaica will save USD$250-million over the life of the deal, which will also bring down the debt to GDP level by some 10-percentage points.

But the Opposition says the government is deceiving the people.

Audley Shaw says the Finance Minister must think Jamaica is a nation of fools.

He’s taking issue with the structure of the deal, which allows the country to skip out on repaying the principal of the loan for several years.

Supporters of the deal have said this a good thing, as paying interest-only in the beginning gives the government more cash flow in the short term.

But Shaw disagrees.

That’s not entirely accurate, which Shaw later clarified.

There are actually four bullet payments: three equal payments of USD$450-million, due in 2026, 2027 and 2028; as well as the full principal on the USD$650-million loan due in a lump sum in 2045.

But the point is made.

Where will Jamaica get the money to make these large payments when they become due?

Mr. Shaw is also reiterating his position that the multilateral institutions should have been called upon to help finance the buyback at cheaper interest rates than those available on the capital markets.

He’s countering a suggestion made by Dr. Phillips, that it was impossible to approach the multi-laterals again.

Mr. Shaw is supported on that point by the Chairman of the JLP’s Economic Advisory Council, Aubyn Hill, who’s suggesting that a way could have been found.