There’re reports coming out of the United States this afternoon, that the increasingly cash-strapped Venezuelan government is selling the Petrocaribe multi-billion dollar debt owed to it by several Caribbean countries, including Jamaica.
Venezuela is being forced to sell the debt because of plunging oil prices.
This has caused a precipitous decline in government revenues needed to sustain social spending.
It’s being reported in the international media that Venezuela has sold more than USD$4-billion of oil debt owned by the Dominican Republic to US investment bank, Goldman Sachs, for USD$1.75 billion.
That equates to just 41% of its value.
Goldman Sachs is reported to have made a 59-percent profit or USD$2.3 billion dollars from the Dominican Republic’s PetroCaribe debt which was just over USD$4-billion in August this year.
According to reports on the US financial news network, Bloomberg, Goldman Sachs is also holding talks with the Venezuelan Government to reach a similar agreement with the Jamaican Government.
The deal is a huge bargain for Goldman Sachs.
It shows the desperation of Venezuela where inflation is over 60% and which faces the world’s biggest budget deficit.
The international media are reporting that it’s imperative for Venezuela to get cash to sustain social spending and subsidies granted to countries such as Jamaica, Cuba, Nicaragua, Guyana and Haiti.
The Venezuelan government gets 95% of its revenues from oil sales.
The situation has worsened dramatically in recent months with falling oil prices.
The drop in oil prices has caused the Venezuelan basket of crude to decline from USD$99 per barrel in June this year to USD$68.
Economists project that the Venezuelan government needs a price for a barrel of oil above USD$100 to maintain spending and ensure stability of his region.
And, reacting to the news being reported in the international media, Energy Minister, Phillip Paulwell, says Jamaica would be willing to work with an arrangement that would assist its cash-strapped Venezuelan partner.
He says as recently as two weeks ago, the Venezuelan authorities indicated their continued commitment to the PetroCaribe arrangement.
And, Finance Minister, Dr. Peter Phillips, is moving to reassure the country that the possible sale by Venezuela of oil debt owed by Jamaica to US investment firm, Goldman Sachs, will not affect the country’s IMF programme.
Dr. Peter Phillips, Finance Minister.
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