Venezuela has suspended long-term oil loans under its energy assistance program to nine Central American and Caribbean nations pending review of the consequences here of the OPEC price cut, the Venezuelan Investment Fund's president said today.
Under the program--operated jointly with Mexico--Barbados, Costa Rica, El Salvador, Guatemala, Honduras, Jamaica, Nicaragua, Panama and the Dominican Republic receive long-term, low-interest loans to cover almost a third of their crude oil supplied by Mexico and Venezuela. Short-term loans are to continue.
Today's announcement followed calls from labor and business groups for an immediate end of Venezuelan foreign aid after the Organization of Petroleum Exporting Countries price cut announced Monday in London.
Venezuela, which had anticipated oil export revenues of $16.2 billion this year, stands to lose $3 billion to $5 billion as a result of the weak oil market and this week's OPEC agreements. The oil market was a factor in the imposition of exchange controls and partial devaluation here three weeks ago.
"We have deferred approval of the long-term credits until the next stockholders' assembly of the fund," said its president, Hermann Luis Soriano, adding that approval was likely in April.
According to a 1980 accord, which grew out of a previous agreement signed by Venezuela and Mexico in 1975, the region's two main oil-exporting countries agreed to provide five-year loans at 4 percent annual interest on 30 percent of the sales, up to a total of 160,000 barrels per day, to the nine countries. The price of the oil has been based on the $34 OPEC benchmark price. Venezuela has been providing 63,000 barrels per day to the region.
Those loans could be converted into long-term financing--20 years at 2 percent interest after a three-year grace period--if the money was used for energy development projects. Soriano said it was this facility that has been suspended. He would not say what amount has been affected by the measure.
By the end of 1982, the fund had assigned $562 million for development projects under the program, of which $365 million has been spent.
Soriano said Venezuela had not consulted with Mexico before taking the action since it did not involve a change in the agreement. The two countries, potential rivals for the U.S. residual fuel market, have just reached a broad based agreement which provides the basis for cooperation rather competition in supplying that market.
Mexican Ambassador Jesus Puente Leyva said Mexico had not suspended credits and the accord was still in force. "If a revision is to be made, it will be done at the end of July, when it is time to renew the agreement," he said.