14ymedio, (with information from agencies), Havana, 13 February 2018 — The London Club, a powerful group that offers commercial credit to Cuba, offered the Government of Raul Castro “significant debt relief,” according to the Club’s coordinator Rodrigo Olivares-Caminal, speaking to Reuters.
The London Club represents three investment funds (Stancroft Trust, Adelante Exotic and CRF) and a commercial bank to which the Island owes a sum estimated at 1.4 billion dollars. Although the details of the proposal are unknown, Cleary Gottlieb Steen & Hamilton LLP, a firm specializing in debt restructuring, indicated that it contains “significant debt relief.”
The proposal comes at a very opportune time for the government of Raul Castro, who is facing serious liquidity problems due to the crisis in Venezuela, Havana’s largest economic ally and, as of the beginning of this century, its oil benefactor.
“We are trying to give the country another opportunity to reach an amicable agreement,” Olivares-Caminal told Reuters. “It is a good faith proposal,” he said.
The president of The London Club believes that this deal will improve Cuba’s relations with capital markets, relations that have been strained after the failed policies of former President Fidel Castro, who had called on all Third World countries to abandon paying their debts because they were “unpayable.”
Last December, his successor, Raúl Castro, reiterated before the National Assembly the “firm intention” to continue gradually restoring the economy’s “international credibility” by making payments on external debt. Castro said 2018 would be a “complicated year for the nation’s external finances.” However, non-payments to suppliers remain a reality and have contributed to the shortages of medicines and other essential products.
Cuba received important relief in 2014 with the cancellation of 90% of its debt with the former Soviet Union, which amounted to 35 billion dollars, and which was owed to the Russian Federation, the legatee of that debt. Havana agreed with Moscow to invest the remaining 3.5 billion in joint projects on the island.
In 2015, Cuba reached an agreement with the Paris Club whereby the Island was forgiven 8.5 billion of the 11.1 billion dollars in accumulated debt and interest since 1986, on the condition that Havana pay the rest by 2018. Cuba has made two payments so far in the subsequent three years.
The 14ymedio team is committed to serious journalism that reflects the reality of deep Cuba. Thank you for joining us on this long road. We invite you to continue supporting us, but this time by becoming a member of 14ymedio. Together we can continue to transform journalism in Cuba.