Creditors Grow Impatient with Cuba’s Nonpayments

The liquidity crisis in Cuba is extreme and, although the authorities do not want to stop payments, their creditors do not trust them. (14ymedio)

14ymedio bigger14ymedio, Havana, 24 February 2020 – Cuba was to reimburse its creditors of the Paris Club between 32 and 33 million dollars last year, of the total of 82 million dollars owed, according to the information provided to Agance France-Presse by diplomatic sources.

The irritation of the creditors is evident in the statements made to AFP by several sources. “They said they would pay their debts. There is no plan, and there is a lack of credibility,” a diplomat informed the agency.

“We met [Ricardo] Cabrisas earlier this year,” says another source, who explained that the Deputy Prime Minister showed a defeatist tone, but expressed that the Island’s intention of not entering into a debt moratorium.

In an official letter addressed to the Director General of the French Treasury and President of the group of creditor countries of Cuba, Odile Renaud-Basso, to which AFP had access, Cabrisas promised that Cuba will pay in May. The nonpayment in February by the Island could result into a 9% surcharge on the debt.

“They have to propose a precise schedule,” an Ambassador, who admits that the Cuban government “is having a bad time,” informed AFP, adding, “They have no liquidity.”

Since Cuba entered into a debt moratorium, in 1986, access to international markets was closed until 2010 when the outstanding Chinese debt of 6 billion dollars was forgiven; as was that of Mexico, for 400 million dollars and finally Russia, its biggest creditor, for about 35 billion dollars.

In 2015, the Paris Club, consisting of 14 countries, forgave Cuba 8.5 billion dollars of the 11 billion owed. The rest was restructured in payments until 2033 and in investment projects in the Island.

Ever since then, the European Union has been one of the biggest investors and business partners of the Island, with an exchange of 3.47 billion dollars in 2018; however, the situation has become complicated in recent times.

Cuba’s main ally, Venezuela, has fallen and the pressure by Donald Trump’s administration has increased with the use of sanctions; furthermore, problems in the main economic pillars of the Government are added. On the one hand, the sale of medical services suffers due to the changes in political parties in several governments in the area, such as Brazil, Ecuador and Bolivia. These countries hired professional services from Cuba, primarily medical, but have now broken the agreements, or demanded from Cuba a variation in the conditions of the professionals if the nation wants to keep them; something that Havana refuses to do.

Tourism is another area that has shown a great weakness this year affected by the tightening of the embargo, but also by the decline in the European market. In 2019 Cuba’s revenue in this sector dropped 9%.

According to the latest official numbers, the external debt has increased by 53% between 2013 and 2016, reaching 18.2 billion dollars.

According to AFP, Spanish companies are owed for nonpayments totalling 300 million euros, about 325 million dollars.

The London Club has also been trying to negotiate an agreement with the Island for years without success. Last week it turned out that the CRF I Ltd investment fund has taken the case to court, according to the Bloomberg economic agency.

“The board of CRF have made clear that the legal process now underway will not be halted unless there is a satisfactory prior negotiated settlement with the Cuban government,” the company announced in a statement.

The amount of the claim is unknown, but the company has been waiting for thirty years for the debt to be paid. “We are losing our patience,” said chairman David Charters.

“If [Cuba] wants to regain access to the international financial market, they have to fix this.”

Translated by Francy Pérez Perdomo


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