The CEO of the Petrocaribe Development Fund, PDF, Dr. Wesley Hughes, is clearing the air on the status of the Fund, in the wake of the government’s debt buyback from Venezuela.
The government purchased the USD$3-billion debt for $1.5 billion.
However, Dr. Hughes says the buyback didn’t benefit the PDF.
One of the PDF’s functions is to lend money to public bodies for social projects.
Dr. Hughes says even his borrowers were confused about what the buyback meant for them.
The confusion is understandable as the arrangement can seem complicated.
When the government buys oil from Venezuela, it only pays half the cost up front.
The other half goes straight into the PDF, to ensure that the government has the money to pay when the time comes.
So, for every dollar that the government owes Venezuela, there’s an equal amount in the PDF.
Up until the end of December 2014, the government owed Venezuela USD$3-billion US.
Therefore, there was also USD$3-billion in the PDF.
But when the government bought back its debt to Venezuela for $1.5 billion, the PDF no longer needed the full USD$3-billion.
So there’s now $1.5 billion in the PDF, even though the government no longer owes Venezuela.
Some would argue there’s no need for these funds to remain in the PDF.
But Dr. Hughes says a decision has been taken not to scrap the fund.