Historic financial agreement

The Paris Club exempted the Cuban government from the payment of the millions of dollars in accumulated interests for an outstanding debt since the 1980s.

The agreement reached with the Paris Club improves Cuba’s international credibility,favouring the expansion of its commercial ties abroad and the entrance of foreign investments.

In an arrangement defined as historic, the Paris Club accepted to write off a substantial part of the debt of more than 11 billion dollars Cuba has owed the members of this group of creditor countries and refinance the rest of the debts. The news, announced on December 14, puts an end to the negotiations both sides had been maintaining to settle a standstill in payments of almost three decades.

“This agreement definitively resolves the question of Cuba’s mid- and long-term debt, which had not been paid since the 1980s,” the Finances Ministry of France stated in a communiqué. France is the country that led the negotiations as the principal creditor.

 

Out of the total debt of 11.1 billion dollars, the Paris Club exempted Cuba from the payment of the interests accumulated during the period of non-payment, which amounted to 8.5 billion dollars. In exchange, Havana has made the commitment to pay the 2.6 billion dollars of the principal in a period of 18 years.

 

The French government, in particular, annulled some four billion dollars for outstanding interests of the debts, and which represented the major part of what the Caribbean nation owed this country. The agreement implies that of the 470 million Havana will pay, 230 million will be invested in development projects in Cuba, the Finances Ministry reported.

As part of the negotiations both sides have maintained for several months, the president of the Paris Club, Bruno Bézard, came to Havana last March, a short time after Russia wrote off 90 per cent of Cuba’s debt.

As part of the negotiations both sides have maintained for several months, the president of the Paris Club, Bruno Bézard, came to Havana last March, a short time after Russia wrote off 90 per cent of Cuba’s debt.

 

The Paris Club celebrated the progress achieved by the largest of the Caribbean islands in organising its foreign finances. “This agreement levels the path for a new era in relations between Cuba and the international financial community,” French Finances MinisterMichel Sapin said in the communiqué.

 

Spain, Cuba’s second largest creditor in the group, decided to write off 1.8 billion dollars of the accumulated interests, but will charge the 590.7 million dollars of the original debt.

 

The other Paris Club members are Australia, Austria, Belgium, Canada, Denmark, Finland, Switzerland and United Kingdom.

 

The meeting to seal the agreement took place from December 10 to 12 in the French capital, but was preceded by intense negotiations, including a visit to Havana last March by the president of the Paris Club, Bruno Bézard, to study the renegotiation of the debt and the outstanding payments by Cuba with several countries of that group of creditors.

 

Under the presidency of Raúl Castro, the Cuban government has set itself the task of organising its external finances with the aim of gaining international credibility. The recent agreement gives continuity to previous restructurings of this Caribbean nation’s debts with other countries, like China, Mexico, Japan and Russia. (2015)

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