Caribbean & Central America - July 2013 (ISSN 1741-4458)

Petrocaribe: On 2 July Guatemala’s Vice-President Roxana Baldetti said that the government was analysing the possibility of Guatemala signing up to Petrocaribe, Venezuela’s oil trading scheme, on the condition that interest rates charged are less than 2%. Under the initiative, Venezuela offers oil to the scheme’s 17 members on concessionary terms, whereby members pay 40% at market rate within 90 days and the remaining 60% spread over 25 years at an interest rate of 1%, as long as oil prices are over US$100/b. When oil prices fall below US$100/barrel, the conditions are tightened, so that 50% is demanded upfront. However, both Guatemala and Honduras – which Venezuela’s President Nicolás Maduro announced on 5 May at a Petrocaribe summit in Caracas that would now be included in the scheme – claim that the Venezuelan government has doubled interest rates to 2%. Guatemala had signed up to Petrocaribe in 2009 under the Alvaro Colom administration (2008-2012), but it ultimately failed to ratify the agreement amid last minute differences with Venezuela over its terms and conditions. Honduras first signed up to Petrocaribe in December 2007 under the former president, Manuel Zelaya (2006-2009), but was suspended after Zelaya was ejected in a coup in June 2009. The change in interest rates was notably not mentioned in the final statement issued at the most recent Petrocaribe summit, held in Managua, Nicaragua, on 29 June. What did come out of the Managua summit, however, was the possibility of boosting trade between Petrocaribe members in regional transportation, communication, agriculture, tourism and social service projects although specifics were not provided.

Tax setback: Guatemala’s President Otto Pérez Molina has admitted defeat over a key initiative – tax reform. On 14 June, the unicameral 158-member legislature approved a presidential decree halving the Impuesto Sobre Circulación de Vehículos (ISCV), vehicle tax. The tax, which the Pérez Molina government hoped would generate some Q1.2bn (US$53.45m) annually, was part of a reform package passed in February 2012 [RC-13-03]. However the influential private sector lobby, the Comité de Coordinación de Asociaciones Agrícolas, Comerciales, Industriales y Financiera (Cacif), has since challenged various provisions of the package before the constitutional court. The resultant uncertainty led Vice-President Roxana Baldetti to remark that the government would have to revise its projected tax take for 2012 of Q$49.1bn (US$6.3bn) in view of the change.

Remittances: According to figures from Guatemala’s central bank (Banguat), family remittances sent by Guatemalans living abroad (most of whom live in the US) amounted to US$2bn in the first five months of 2013. The total for 2012 was a record US$4.78bn, up from US$4.38bn in 2011.