The Caribbean Community (CARICOM) has announced that it intends to approach multilateral lending agencies with proposals for debt relief and loan refinancing.
At the same time, the regional body has signalled its intent to press Venezuela to at least delay proposed changes to the PetroCaribe arrangement.
Guyana's President, Bharrat Jagdeo, head of the CARICOM prime ministerial task force charged with devising a recovery plan for the region in light of the turbulent world economic recession, has said Caribbean development may stagnate if the proposals are not taken on-board.
"A group of heads will go collectively to meet the heads of the multilateral financial institutions to argue that middle-income countries, with the peculiar vulnerability that we have in this region, must be eligible for multilateral debt relief," Jadgeo told journalists at a press conference Monday.
"We will be arguing that we get multilateral debt relief and, second, that we get resources to refinance some of the debts that we have already contracted on financial terms or on high-interest rates," Jadgeo added.
Economic crisis
The Guyana president has said that CARICOM countries would not be seeking "a write-off at this point in time for a specific amount of debt".
He argued that the region has been unable to react effectively to the economic crisis because of the indebtedness of many countries.
In lending his support for the need to revisit loans to CARICOM countries, Jamaica's Prime Minister Bruce Golding said it would allow countries fiscal space to develop their economies.
Golding pointed to the example of funds used to capitalise the National Road Operating and Constructing Company (NROCC), which his administration has called the debt queen, as one loan Jamaica would gladly refinance.
NROCC, the company responsible for the construction and operation of the country's highways, is projected to have its loan liabilities climb to $46.3 billion this fiscal year.
"Included in that mix of loan funds is money that was borrowed at 11 per cent, money borrowed in foreign currency," the prime minister said.
Expensive debts
Golding told journalists that engaging the multilaterals would give countries like Jamaica an opportunity to "retire some expensive debts with new loans that we would get at a cheaper cost".
"That would ease the budget of an enormous weight that it has to be carrying now to service the debt," Golding said.
Meanwhile, Jadgeo has said CARICOM states have agreed to approach Venezuela to discuss the impending changes to the PetroCaribe agreement.
According to Jadgeo, the change in the agreement now "will present grave difficulties for some of our member states".
PetroCaribe is a Caribbean alliance with Venezuela to purchase oil on preferential terms. The payment system allows countries to buy oil at market value, but only a certain amount is needed up front. The remainder can be paid through a 25-year financing agreement at one per cent interest.
"We would like the impending changes altered or delayed and particularly over the period when we have some difficulties," Jadgeo said.