Petrocaribe

Abstract

This chapter analyses the implementation of Petrocaribe, which buffers oil price shocks, facilitates barter trade, and generates soft loans for social development. This decreases dependence on IFIs and donors and stabilises vulnerable economies, providing greater fiscal and policy space. “Social purpose” conditionality favours “people-centred” development, legitimising left-of-centre policies. Petrocaribe has become integral to the Caribbean and Central American economic landscape. Yet, barter trade has not prospered, and lax monitoring could allow off-budget debt to become noxious in the long term. Petrocaribe’s dependence on parallel governance structures centred on the Venezuelan presidency also implies contingency on the ruling PSUV in Venezuela. While Petrocaribe’s design adapts well to falling oil prices, the Venezuelan economy does not, making Petrocaribe’s future highly uncertain.