Reduced Petrocaribe Flows Change Economic Landscape in 2016

Dean Barrow

In his New Year’s Address, released on Wednesday, Prime Minister Barrow acknowledged that the landscape in 2016 will be different than that of 2015, and a significant feature of that change will surely be spending. At least where government expenditure is concerned, 2015 was a time of plenty because there were four elections, including the big one, and elections bring money. There was also plenty of Petrocaribe money to go around. Still, there were indications in the last half of the year that the spending frenzy could not continue, and it won’t. After three years of heavy reliance on coffers bulging with Petro-dollars, G.O.B. now has to face the reality of very prudent fiscal management in 2016.

Prime Minister Dean Barrow

“Among the challenges that we will confront, the reduction in Petrocaribe flows is perhaps the most pronounced. With the dizzying fall in oil prices, we expect to get much less from these Venezuela loan funds than we did in 2015. And already 2015’s intake was only half of 2014. This, combined with the drying up of earnings from our own petroleum exports, will put a severe dent in Government revenues. It is what, in the face of the coming step-up in SuperBond payments and the Compensation Award expected to be handed down towards the middle of the year, has caused us to raise the duty on fuel imports. The CIF price of these is so low that we were able to judge the increase a bearable burden. And with this, which is the only tax measure we will take, Government will be able to meet debt obligations and pay for expansion in services, particularly regarding national security and the acquisition of assets such as the three B.D.F. helicopters and the two latest model Coast Guard boats.”