NEW YORK (CMC):
A SENIOR analyst with a top international credit rating agency says that Caribbean states could face serious economic and political fallout from escalating oil prices.
Helena Hessel, of the Wall Street firm of Standard and Poor's, said in a statement on Saturday that the skyrocketing impact could cause governments grave problems.
"Apart from the impact on the balance of payments, in a number of countries in the Caribbean, like Grenada, Belize and Jamaica, where socio-political issues are somewhat difficult, if gasolene prices continue to rise, the impact would be negative," she said.
Hessel, however, ruled out any negative effect on Trinidad and Tobago and Suriname.
"All of the countries, except for Trinidad and Tobago and Suriname, their balance of payments and current accounts are highly negative," she said.
HIGH TRADE DEFICITS
"All of them have high trade deficits because they import everything and export little," she added. "Some of them have better performances in services accounts because of tourism. So, their trade deficits will be increasing."
Hessel pointed to Jamaica's situation as an example of the Caribbean trend, stating that Finance Minister Omar Davies said the nation's economic performance was worse than expected in the 2005-2006 fiscal year, which ended in March, because of the hurricane season and rising oil prices.
"He pointed out that the same thing would be happening in 2006-2007 because of high oil prices," Hessel said.
She added that large-scale construction in 2006-2007 in Barbados would result in huge oil import bills.
"Barbados, in this year and the next, will probably import more oil than usual and, therefore, it could be affected by the rising oil prices," Hessel said.
