Cuba’s Umpteenth Negotiation With the Paris Club for Non-Payments, Meanwhile Luxury Hotels Multiply

The Paris Club asks Cuba for a new payment schedule to meet its debt. (Latin Press)

14ymedio bigger14ymedio, Madrid, 31 August 2023 — The future of Cuba’s 4.827 billion dollar debt with its Paris Club creditors is at stake today in Havana. According to the official press, William Roos, co-president of the institution, proposed establishing a new calendar in accordance with Cuba’s ability to pay after expressing that “there is understanding towards the difficulties that the island is going through.”

The official traveled to Havana this Tuesday together with Fabien Bertho, secretary of the Paris Club, to meet on Wednesday with Ricardo Cabrisas Ruiz who, in addition to being vice prime minister and head of Foreign Trade and Foreign Investment, has been the main actor of the foreign debt renegotiation agreements with its different creditors.

In the talks, which culminate today, the Cuban side argued that “the political criminal and the illegitimate inclusion” of Cuba in the list of State sponsors of terrorism hinders access to sources of financing and foreign investment, “when in the midst of the rise in prices Cuba needs foreign currency for its economic and social development and to fulfill its obligations.”

Cuba will obtain a new payment schedule to pay a debt that continues to be the second highest in the region, only surpassed by Venezuela, whose debt exceeds eight billion dollars

If Cabrisas manages to convince the Paris Club that in order to pay the debt the constant Russian and Chinese investments in the Island or those that the Government itself allocates to the construction of hotels are not enough, Cuba will obtain a new payment schedule to pay a debt that it has negotiated twice in the last eight years, a debt that continues to be the second highest in the region, only surpassed by Venezuela, whose debt exceeds eight billion dollars.

Cuba’s creditors within the Paris Club are Australia, Austria, Belgium, Canada, Denmark, Spain, Finland, France, Italy, Japan, the Netherlands, Sweden, Switzerland, and the United Kingdom. Until 2015, the debt amounted to 10.66 billion dollars. That year, a reduction traditionally calculated at 8.5 billion was negotiated, although the documentation for the years 2016 and 2017 is not archived on the institution’s website.

In 2018, the amount amounted to 5.56 billion dollars, which was reduced to 5.211 billion in 2019. But with the arrival of the pandemic, Cuba stopped paying the installments and, at the end of that year, the amount had increased to 5.667 billion dollars.

Cabrisas held several meetings in 2021 to improve the conditions for payment of installments. At that time, they also noted the “unprecedented tightening of the economic, commercial and financial blockade of the United States and the impact of phenomena associated with climate change and the covid-19 pandemic.” The authorities promised that, after the worst of the pandemic, tourism would recover and the money would come again and they obtained new relief, with a moratorium until 2022.

What the regime had not calculated is that the tourists would not return as expected. Last year, of the 2.5 million international travelers expected, the number did not even reach 1.7 million. An adverse international economic context together with a terrible management of the so-called Ordering Task* finished off an economy battered for decades and that has plunged the Island into the worst crisis in living memory, at the level of the Special Period of the 90s.

The payment schedule, therefore, becomes impossible, which is why the Government is focused on obtaining a new extension, which it will also try to encourage with the visit of the Paris Club representatives to various bilateral collaboration projects, with financing from the French Development Agency and the Franco-Cuban Contravalor Fund, which are part of the agreements.

In its latest Statistical Yearbook, corresponding to 2023 and published this August, Cuba declared almost 20 billion dollars in foreign debt, but the data refer to 2020

In its latest Statistical Yearbook, corresponding to 2023 and published this August, Cuba declared almost 20 billion dollars in foreign debt, but the data refer to 2020, confirming suspicions that the 18.2 billion dollars it owed in 2016 would have increased.

In 2021, Cuba also agreed to a deferral of the payment of its debt with Russia, which it had stopped paying in 2020. In this case, the amount is relative to state export credits that Moscow granted between 2006 and 2019, with a total amount of 2.3 billion dollars. At the time of signing the pact, the default deficit was 57 million, in addition to another 11 million for late-payment of interest, which must be returned between 2022 and 2027.

Years ago, Raúl Castro had already managed to get Moscow to forgive 90% of the 35 billion dollars of the debt contracted during the time of the USSR.

Other minor creditors are Mexico, which in 2013 forgave 70% of the 487 million dollars it had lent to the island, and Japan, which a year later in 2014 granted a one billion dollar debt relief. Vietnam and China have also forgiven an unknown amount to the Island.

The palm, however, goes to the historical debt of 15 billion that Cuba owes to Argentina. Several of its leaders, including the current one, Alberto Fernández, have urged the Island to return it or to negotiate an exchange for it – an exchange for vaccines was even negotiated, which did not prosper – but every attempt has been unsuccessful.

A separate case is that of the debt with the London Club, which has reached the courts and is still far from being resolved. This April the trial was held to determine whether the CRF I Limited Investment Fund was the holder of the 72 million euro debt that Cuban financial institutions signed with entities later acquired by it.

The ruling confirmed that the CRF was the legitimate owner, although the consequences are nothing more than an offer from its president to now negotiate a payment schedule. “[We must] find a solution with Cuba that (has) zero impact on its budget for at least five years, recognizing the difficult economic situation the country is going through,” it said.

*Translator’s note: The “Ordering Task” [Tarea Ordenamiento] is a collection of measures that include eliminating the Cuban Convertible Peso (CUC), leaving the Cuban peso as the only national currency, raising prices, raising salaries (but not as much as prices), opening stores that take payment only in hard currency which must be in the form of specially issued pre-paid debit cards, and a broad range of other measures targeted to different elements of the Cuban economy. 


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