Costa Rica: last chance for Petrocaribe

The Broad Front party – Frente Amplio - said last week that Costa Rica should join Venezuela’s Petrocaribe initiative, in order to bring down fuel prices.

With an increase in prices of close to 25% during the first six months of the year, including a drop in the value of the national currency, many Costa Ricans applauded the idea, which is unlikely to work.

For one thing, the deal doesn’t bring down the price of petroleum.

For another, Venezuelan fuels may not meet Costa Rican standards.

In a typical deal, a country buys fuel from Venezuela, paying half in cash.

Venezuela charges a low rate of interest on the balance, which the buyer must invest in social programs for a period of up to 25 years.

This may be a good way of helping poor people.

But a country could owe billions to Venezuela, if investment in social programs fails to stimulate the economy.

Meanwhile, the price of gasoline stays the same.

When it comes to quality, Venezuelan fuel may have levels of sulfur, which exceed Costa Rican limits.

In Central America, El Salvador, Honduras and Nicaragua are members of Petrocaribe.

Guatemala left the program at the end of last year.

Costa Rican President Luis Guillermo Solis ordered his staff to prepare a report.