By Amelie Baron

Dec 5 (Reuters) – Haiti has begun servicing its oil debt with Venezuela which now stands at $1.2 billion, and is exploring ways to make payments in kind with agricultural products rather than cash, a senior Haitian official said on Thursday.

The Ministry of Finance official was responding to a World Bank envoy who expressed concern over a lack of transparency in Haiti’s handling of public funds generated by cut-rate Venezuelan petroleum imports.

Mary Barton-Dock, the World Bank’s Special Envoy to Haiti, told a press luncheon in the capital on Wednesday that a lack of transparency was the biggest obstacle to the country’s economic development, citing Venezuela’s Petrocaribe program, which allows beneficiaries to buy fuel from the South American oil exporter at favorable rates and easy payment plans.

Under Petrocaribe, Haiti pays only 40 percent of its oil bills in the short term, with the rest reimbursed over a 25-year period during which the government is free to spend the funds more or less as it pleases.

The World Bank would like to see better communication about the use of these funds, said Barton-Dock, addressing reporters in French.

“So far, transparency in the use of Petrocaribe funds is minimal,” she said.

Michael Lecorps, a senior official attached to Haiti’s Ministry of Finance defended the oil program saying it was fully transparent with regularly updates on an official website.

Lecorps, who is director of Monetization and Program Development Assistance, briefly showed journalists a confidential draft of a recent internal audit by Venezuela’s state-owned oil company, PDVSA.

“They spent 27 days in our office and they checked the whole process. They studied the 2010-2012 period and their conclusion is a ‘no finding,’ which means they did not find anything wrong to note,” he said.

“All the information on all Petrocaribe-funded projects is on the website,” he said, adding details include when the project began, how much money was disbursed, when it was disbursed and how much remained to be disbursed.

PDVSA officials could not immediately be reached for comment.

Lecorps said strict procedures were in place to ensure that funds went to where they were allocated. Contracts followed a standard competitive bid procedure he said.

BARTER SCHEME

As of Nov. 30, Haiti’s debt to Venezuela exceeds $1.2 billion, he said, adding that the government had begun to service the debt in May after a 3-year grace period lapsed, at a cost of about $2.8 million a month.

Lecorps said a mechanism had been established to repay the debt with food products rather than cash.

“We’re looking for Haitian agro-industrial products to be exported. Venezuela gave us a list of 20 products they’re looking for – food and also pharmaceuticals products,” he said.

The next step is to send samples of those products so Venezuela can check quality and prices, he added.

Haiti’s prime minister Laurent Lamothe has said the country was looking at possibly sending coffee, grapefruit and mangos.

As Venezuela has found itself owed mounting Petrocaribe debts from member countries, it began introducing the possibility of payments in-kind, including food.

However, most – if not all – Caribbean debtors are already net food importers.

Some economists have warned that Haiti is too reliant on Petrocaribe at a time when Venezuela is seeking to change its financing arrangements because of domestic cash flow constraints and product shortages.

Guatemala recently withdrew from the Petrocaribe oil alliance after the Central American country failed to negotiate favorable rates for purchases and financing. (Additional reporting by David Adams, editing by G Crosse)

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