by Rick Lowe
In the Business Briefing section of The Nassau Guardian today there was an intriguing headline: Venezuela lines up $850m loan.
Apparently Venezuela is using $400m for low cost housing, $400m for subway expansion and the remaining $50m for future debt issues by the local utility Electricidad de Caracas.
Why on earth would Venezuela a country that should be "rolling in dough" as a result of the increasing cost of oil need to borrow money?
So does this put another lie to the great "deal" that Chavez is "giving" to his Caribbean neighbours?
Let's think about this a little further.
If The Bahamas proceeds with PetroCaribe based on the information available today, Venezuela will send oil to the Bahamian government (and no cash). The Bahamian government will then sell this oil to the local oil companies and Bahamas Electricity Corporation etc who will have to pay in full for the fuel they receive.
The Bahamas government will then pay Venezuela for 60% of the shipment of oil they received and retain 40% as a loan owing to Venezuela.
So in other words, Venezuela is sending oil and the Bahamian government will get the cash for the "loans" from the local economy.
The Bahamian government is happy as they get more taxpayer dollars to waste in the near term, and Venezuela is happy because The Bahamas will potentially owe them millions of dollars.
If Chavez is such a great guy, why doesn't he simply lend The Bahamas the cash without trying to disrupt the market?
It would appear that Venezuela needs a little financial guidance. Why borrow $850m from The Andean Development Bank Corporacion Andina de Fomento for market interest rates and then "lend" money to their neighbours at 1% per annum?
It just does not add up to this blogger.
