BASSETERRE, St. Kitts - THE Federation’s Prime Minister, Dr. the Hon. Denzil Douglas, provided details yesterday (June 17) on a number of important economic agreements reached at last week’s PetroCaribe Summit.
Douglas stated that a US$10M loan agreement signed between St. Kitts-Nevis and Venezuela would be of utmost importance in the near future and would help the nation climb out of its massive debt left by the closure of the sugar industry.
“The $10 million was the first tranche of the $50 million loan package that was in fact being negotiated. It has a moratorium, if I am not mistaken, for about two years. The interest payment is very low.
“The whole idea was to help us refinance existing debt. You know that the sugar industry debt is to the tune of about EC$400 million, which is about US$150 million,” Douglas stated during his monthly press conference.
Because of the “lucrative” two year moratorium and low interest rate, Douglas said that the substantial sum of cash would benefit the people of St. Kitts-Nevis at the same time the national debt is being refinanced.
“It will take us another two years before we pay on this, and in the mean time this $50 million could be used to help reduce the existing debt situation. It would [also] lend support to specific items in the budget that have already been passed by parliament for financing.”
One of the more controversial elements currently being discussed about the PetroCaribe agreement is the handling of funds between governments by trust funds.
Local Queen’s Counsel Charles L. Wilkin issued a letter ahead of the PetroCaribe Summit in St. Kitts stating his concern that trusts are “a quintessential capitalist tool” because they are not required by law to publish their financial reports.
Prior to the Summit, the Embassy of the Bolivarian Republic of Venezuela confirmed to SKNVibes that a trust fund for PetroCaribe money is currently being established in the Federation through the National Bank of St. Kitts.
The Prime Minister assured the nation that the trust funds used by PetroCaribe countries are perfectly legal and transparent.
“Nothing is wrong with [placing the money in trust funds]. We sought very strong legal advice, and there is nothing at all wrong with that.”
He did note however that many of the member countries of the PetroCaribe have decided to have their payments to Venezuela handled by the ALBA Bank, an institution established to handle the finances of countries that are members of the Bolivarian Alternative for the Americas (ALBA) trade agreement, which is also operated by Venezuela.
“There is an ALBA bank that is in existence. What we decided at this last Summit is that what would have been money placed into trust funds would now be taken over and placed into the ALBA bank so that if there was a problem before, there is not going to be any problem now - although there was not a problem.
“We knew it was quite legal, transparent and okay [to put money into trust funds],” he added. “Nevertheless, the ALBA bank has now decided to take over a lot of these arrangements that were being pursued as trust funds.”
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