Putin approves restructuring Cuba’s million-dollar debt again

Putin approves restructuring Cuba's million-dollar debt again

HAVANA, March 11. Putin approved on Monday the modification of the credit agreements between Moscow and Havana that grants Cuba better conditions for the payment of a million-dollar debt, as well as its restructuring.

According to the EFE agency, the document that supports the presidential decision was published on the legal information portal of the Russian Government.

The protocols approved by Putin, a close ally of Havana, refer to the state credit agreements for Cuba granted between 2009 and 2019 for the purchase of hydrocarbons.

According to the Deputy Minister of Finance of Russia, Alexei Sazanov, the debt contracted by Cuba within the framework of the agreements whose restructuring was approved amounts to 277.2 million dollars.

The facilities granted to Havana include the possibility of settling the debt in rubles, postponing the payment plan from 2023-2027 to the period 2028-2040 and modifying the calculation of rates due to delayed payments.

Russia considers that aid to the Cuban regime, aimed at guaranteeing its supply of crude oil, will strengthen Moscow’s political positions in Latin America, although these supplies barely exist today and the Island is experiencing its worst electricity crisis since 2022, with simultaneous blackouts. in up to 44% of the national territory and increases in gasoline prices above 400%, as well as the partial dollarization of its sale.

In April 2023, Russian Foreign Minister Sergei Lavrov visited Cuba and, according to the Russian newspaper Kommersant, announced that Moscow and Havana had almost completed the agreement on the terms under which the island’s debt would be restructured. with the Kremlin. As of February 2022, that sum amounted to $471 million, according to that report.

In August of that same year, Moscow granted the Government of Cuba an extension until 2040 of payments on a loan for the construction of a power plant that never saw the light of day, and for whose fate Havana has never been accountable.

Havana had to pay interest on that loan for an amount of approximately 1.4 million euros. Initially, this sum was to be paid before February 28, 2022 but was deferred to be settled on June 15, 2025.

According to that agreement, the amount of interest that Cuba had to pay from March 1, 2021, until the end of 2022, equivalent to about 2.2 million euros, could begin to be honored as of June 15, 2028, and be completed on mid-December 2040.

Regarding the principal debt, as well as a series of deferred payments and capitalized interest that Havana had to pay beginning in January 2023, to be fully honored at the end of 2027, it was also moved to between June 2028 and December 2040.

In addition, the repayment of that loan will also be made in rubles, since previously it was a sum in euros.

In 2015, Moscow signed an agreement with Havana to provide it with a state export credit of up to 2.2 billion euros.

These funds would be allocated, as reported at the time, to projects for the construction of electrical units in the Cuban thermal power plants Máximo Gómez, in Mariel, and Ernesto Guevara, in Santa Cruz del Norte, indicated the Russian agency Interfax.

A 200MW power unit would be built in the first, and three others of equal power in the second. The implementation of the project by the Russian side would be carried out by the company Inter RAO – Export, the leader of the sector in the Eurasian nation.

The initial terms of the loan assumed its use between 2016 and 2024. Havana would pay it over ten years, with the first disbursements one year after the launch of the energy units, which according to the original agreement, would be no later than February 1, 2025.

The loan was granted with an interest of 4.5% per year. However, since then there have been no reports of work immediately starting on the project.

The official Cuban press does not mention this issue, although it is a new debt that is added to the billions owed by the Cuban Government, which rarely honors the loans it receives.

In 2022, the Russian official press revealed that Moscow had loaned Havana $2.3 billion between 2006 and 2019 to finance major energy, metal industry, and transportation projects.

In February 2022, hours before the start of the invasion of Ukraine, the Duma (lower house of the Russian Federal Assembly) ratified a debt restructuring project of 2.3 billion dollars, which the president of that entity negotiated in a trip to Havana.

According to the Russian Duma, this project “provides for the restructuring of Cuba’s debt with Russia, within the framework of four intergovernmental loan agreements.”

The reports at that time indicated that since 2020 the Cuban Government stopped paying the debt and asked Moscow to repay the debt.