14ymedio, Havana, 6 March 2108– Cuban state companies intending to import goods valued at more than $100,000 must obtain a letter of credit from the Central Bank, “at a time when the country is struggling with a liquidity crisis and growing debt,” Reuters reported on Tuesday.
According to Central Bank Resolution 19/2018, which came into effect this month, the measure seeks to ensure that companies have the resources to meet their obligations and to prevent “external indebtedness from continuing to grow.”
“Other Latin American countries have adopted similar measures in the past, such as Argentina, but those were market economies not controlled by the state,” a Western banker told Reuters on condition of anonymity.
This source believed that the initiative “would lead to a short-term fall in imports and a slower procurement of supplies, as well as the closure of non-essential and insolvent companies.”
According to government data, imports went from 13.9 billion dollars in 2014 to 10.3 billion in 2016, while in the same period Cuban exports also fell from 17.8 billion to 13.6 billion.
“Cuba reported its debt for the last time in 2014, when it stood at 18.9 billion dollars,” the article notes, which points out that, although the island has since restructured much of its official debt, state companies owe more than one billion dollars to suppliers, according to diplomats and foreign businessmen.
According to Reuters, the island “has suffered from the implosion of the economy and the oil industry of its ally” Venezuela, but also a fall in productivity throughout the country due to electricity cuts.
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