Jamaican officials estimate an end to Petrocaribe could cost the country $600 million a year. Already, the country has amassed about $2.4 billion fuel bill, said Wesley Hughes, the chief executive of the PetroCaribe Development Fund in Jamaica, according to a statement on the government’s website.
Traditional foreign donors and multilaterals have always found the lack of transparency and accountability around Petrocaribe worrisome, especially as they try to change the culture of corruption and get countries to adopt responsible financial management.
This has been especially true in Haiti where the U.S. and other donors required the adoption of anti-corruption measures before erasing $1.2 billion in debt in a 2009 agreement.
After the monstrous Jan. 12, 2010 earthquake, Venezuela also forgave Haiti’s $395 million Petrocaribe debt, according to the Haitian government. But by December 2012, Haiti had amassed more than $903 million in debt, according to government figures.
“How ironic it is that the standard Washington donors helped pave the way for the forgiveness of Haiti’s debt, and here we are three years later and there is a government that has run up the debt, the lion share of that, to Venezuela,” said Robert Maguire, director of George Washington University’s Latin America and Hemispheric Studies Program.
“When does someone in Congress stand up and say, ‘What the hell is going on in Haiti with Petrocaribe and why are we funding this government that is also building up this debt to Venezuela?’ ” he said.
The aid program, Maguire noted, makes “governments akin to college kids with their parents’ credit card.”
Beginning in May, Haiti will have to begin paying for the oil as the three-year grace period ends in May. By the end of 2013, some economists say, the country will have the largest public debt ever in its history.
Earlier this month, Haiti’s Senate Finance Committee head, Sen. Jocelerme Privert accused the government of poorly managing Petrocaribe funds — a criticism the country’s finance minister vehemently rejected, saying all projects are government priorities.
So far, donors have been mute about the debt implications, although days before the quake, the IMF was considering denying Haiti grants because then-President René Préval had arranged to borrow up to $33 million from another Venezuela fund to upgrade the Cap-Haïtien airport.
Donors have repeatedly warned Haitian officials they risk losing their financing if Petrocaribe funds are not reflected in the national budget. At issue currently are $432 million of no-bid contracts from the ministries of public works and agriculture, issued after Hurricane Sandy last fall. Almost all are being financed by Petrocaribe and some have nothing to do directly with storm damage.
Haiti Prime Minister Laurent Lamothe defends the projects, saying when a major storm like Sandy hits, Haiti doesn’t have the luxury of waiting 12-18 months to complete a bid.
“If we can take a faster road to recovery we will, so long as it’s legal,” he said. “We have to give results and fast, in light of a very difficult economic situation.”