Cuba and Paris Club members agree on debt total – $15 bln
By Marc Frank
HAVANA, June 8 (Reuters) – Cuba and the Paris Club of wealthy creditor
nations have agreed that Cuba owes $15 billion stemming from a 1986
default, an important first step toward renegotiating the debt, Western
“The final amount of $15 billion has been approved by both parties, so
that is a big first step and now the creditors will meet to set policy
for formal talks,” said one of the diplomats with knowledge of the
talks, speaking on condition of anonymity.
The figure represents the total that Cuba owes 16 Paris Club nations
from its 1986 default and includes principal, service charges, interest
The diplomats said the agreement was another sign that Cuba’s communist
government is interested in rejoining the global economy and adhering to
international financial rules.
The two sides can now move on to the next phase of renegotiating payment
terms. Cuba has achieved significant debt forgiveness in similar
negotiations with other creditors in recent years.
Most Paris Club creditors are willing to show flexibility with Cuba due
to their increased interest in doing business here following the
Caribbean island’s detente with the United States, the diplomats said.
“Everyone wants to put this behind them now and move forward, and
frankly, after 30 years I think the banks will be happy just to get
something back,” a European diplomat said.
Cuba does not comment on debt negotiations.
The government last reported its “active” foreign debt, accumulated
after it declared a default, at $13.9 billion in 2011. It no longer
reports its “passive” debt from before the default, which economists
estimate at $8 billion plus interest, service charges and penalties owed
governments and commercial creditors.
The Economist Intelligence Unit estimated Cuba’s total foreign debt as
$26 billion at the end of last year.
Negotiations with the Paris Club creditors would be the first since
negotiations failed in 2001, in part due to a huge $35 billion debt owed
Cuba’s former benefactor the Soviet Union, and since then largely
forgiven by Russia.
“I think both sides are more optimistic this time around,” another
European diplomat said. “The Russian issue is out of the way, relations
are improving with the United States and the European Union, and Cuba is
seeking international credibility and more investment.”
The Paris Club is an informal group of creditor governments composed of
Australia, Austria, Belgium, Britain, Canada, Denmark, Finland, France,
Germany, Ireland, Italy, Japan, the Netherlands, Norway, Russian
Federation, Spain, Sweden, Switzerland and the United States.
It has a special working group on Cuba that does not include the United
Russia and Germany have already negotiated bilateral agreements with
Cuba, but want to participate as observers in the upcoming negotiations,
the sources said.
Raul Castro, who replaced his ailing brother Fidel as president in 2008,
has drastically reined in imports and cut state payrolls and subsidies
while insisting the near-bankrupt government get its financial house in
order and pledging to pay its past-due debts.
Cuba has had a trade and current account surplus since 2011 and has
improved its payments record to creditors and suppliers.
In the past four years, Cuba has restructured its debt with Japanese
commercial creditors, Mexico and Russia, each time obtaining reductions
of 70 percent to 90 percent in what was owed in exchange for extended
payment plans it could meet.
Cuba has also restructured its debt with China, estimated by local
economists at more than $6 billion.
(Reporting by Marc Frank; Editing by Daniel Trotta and Leslie Adler)
Source: Cuba and Paris Club members agree on debt total: $15 bln – Yahoo