Cuba paying restructured Western debt despite crisis

Cuba paying restructured Western debt despite crisis

HAVANA, Nov. 5th  (Reuters)   Cash-strapped Cuba has begun paying the fourth installment on its renegotiated $2.6 billion debt to 14 creditor nations,Cuba reached an agreement in 2015 with members of the Paris Club of wealthy creditor nations that forgave $8.5 billion of the $11.1 billion in debt it defaulted on through 1986, as well as charges.

Repayment of the remaining debt was backloaded through 2033 and some of that money allocated to funds for investments in Cuba. Cuba paid around $70 million last year and a further $80 million was due by Oct. 31.

“We met the payment in 2015. We met in 2016, 2017 and 2018. And we will meet it in 2019, too,” Cabrisas said on the sidelines of a trade fair in Havana, adding, “though not without a great effort.”

Cuba is going through a liquidity crisis due to the implosion of ally Venezuela’s economy and the tightening of the decades-old U.S. trade embargo under President Donald Trump.

The country has been late paying traders and investors, and shortages of everything from fuel to food and medicines have plagued the country this year.

Last year a few of the payments to Paris Club members were made after the Oct. 31 deadline, diplomats from six of the creditor nations said, asking not to be identified, and they expected the same this year.

“Both sides understand the agreement’s importance and the difficulties Cuba faces. Nevertheless, we expect them to pay by the end of the year,” one of the diplomats said.

Cuba last reported its foreign debt at $18.2 billion in 2016, and experts believe it has risen significantly since then. The country is not a member of the International Monetary Fund or the World Bank.

Cabrisas informed the informal Cuba group of the Paris Club in August that stepped-up U.S. sanctions might make it more difficult to pay all its members on time, the diplomats said.

The group is comprised of Australia, Austria, Belgium, Canada, Denmark, Finland, France, Britain, Italy, Japan, the Netherlands, Spain, Sweden, and Switzerland.

The diplomats said that so far only a handful of countries, for example, Italy and the Netherlands, had informed local embassies they had received payment, while others expected notification after processing by their respective treasury departments.