Russia plans to give its Cuban ally a financial break, but it won’t be free
HAVANA, Oct 15. Russia provides relief to part of the Cuban debt, as reflected in the ratification of the bilateral protocol published by the Russian Ministry of Finance
and reflects the local press. The text indicates that Moscow accepts a two-year moratorium on the payment of an interstate loan that Havana stopped paying in 2020.
Russia considers that the restructuring of the debt will not have a significant impact, since the deficit for non-payment is 57 million dollars, but between 2022 and 2027 Cuba will return what it owes, in addition to 11 million dollars in interest for the delay.
Russia provided state credits between 2006 and 2019 for exports, which amounted to $ 2.3 billion. The loans were aimed at the agricultural, metallurgical, transport infrastructure or energy supply sectors. But at the beginning of 2020, Cuba stopped paying the instalments. To this must be added non-payment of other obligations in the country, with Russian businessmen, the state development corporation VEB.RF and other exporters.
Moscow proposes to resolve the situation with a two-year moratorium according to which the 2020 debt payments must be repaid in June 2022 and those of the current year by June 2023. Apparently, Russia accepts the Cuban version that there are causes beyond its control.
*country for non-payment to occur, among which are the pandemic, the US embargo, the reduction of Venezuelan cooperation and the fall in income from tourism or medical services. These are “objective difficulties unprecedented in recent decades” according to the document.
The Russian press points out that it is very difficult to force a country to pay if it is contrary to the interests of the state. It is no coincidence that when analyzing sovereign risk, “the desire to amortize” is one of the valuation elements
The Russian press points out that it is very difficult to force a country to pay if it is contrary to the interests of the state. It is no coincidence that when analyzing sovereign risk, “the desire to amortize” is one of the valuation elements, an expert told the Vedomosti newspaper.
Last September 2020, the Cuban Deputy Prime Minister, Ricardo Cabrisas, held a meeting with the president of the Russian Senate, Valentina Matviyenko, to whom he advanced these problems that the State had to face its obligations. At that time, she already asked for the postponement, warning that the worst thing was the difficulty of “predicting when” the impact of the pandemic could be overcome.
During his tenure, Raúl Castro managed to cancel 90% of the debt that Cuba acquired in the days of the Soviet Union and still owed Russia. Mexico forgave 70% of the 487 million dollars that it had lent to the Island and Japan forgave almost 1,000 million of an old debt in 2014. For their part, Vietnam and China forgave part of the debt, but it has not been informed of those amounts.
The Island has breached several of the agreements to forgive part of these defaults. In August 2020, Argentina claimed 2.7 billion dollars from the Cuban government that it owes since the 70s. On the same date, Spain formally paralyzed the agreement to forgive part of the debt it had reached with Cuba in 2015, which affected pending payments for a total amount of 201.5 million euros.
The countries that make up the Paris Club offered Cuba a one-year moratorium on the payment of its debt in June of the same year (Havana had requested a two-year margin and the exemption of sanctions for late payments due to the pandemic of the coronavirus), although that year has already passed.
The island’s foreign debt amounted to $ 18.2 billion in 2016, the last year the Island reported official data, and since then the figure has increased substantially, according to several Cuban economists. (14ymedio)
