Cuba and Japan normalise financial relations

The Asian power accepted writing off around two thirds of Havana’s millions of dollars’ worth of debt in an agreement that is a follow-up to what was agreed upon almost a year ago with the Paris Club.

Cuban Economy Minister Ricardo Cabrisas and Japanese Ambassador Maseru Watanabe signed an agreement to regularise Cuba’s debt with Japan.

Cuba took with Japan another important step in its strategy to organise foreign accounts and recover international financial credibility. Both countries signed this week an agreement to regularise the Cuban debt with this Asian power, which is close to 180 billion yens or 1.75 billion dollars.

Through the agreement, Tokyo wrote off around two thirds of Havana’s total mid- and long-term debt. Thus the largest of the Caribbean islands is exempt from paying some 120 billion yens or 1.17 billion dollars, according to Japanese press reports. Cuba thus normalised its debt with 13 of the 14 Paris Club member countries, news that represents a relief for Cuba in a year that looks grey for its economy’s growth.

Medicine and the pharmaceutical industry appear among the sectors with potential for the development of bilateral trade, as both countries recognised.
Medicine and the pharmaceutical industry appear among the sectors with potential for the development of bilateral trade, as both countries recognised.

The recent financial agreement, which was signed by Cuban Vice President and Economy Minister Ricardo Cabrisas and Japanese Ambassador to Cuba Maseru Watanabe, came before the visit to Cuba of Japanese Prime Minister Shinzo Abe starting September 22.

In December last year the Cuban government had reached an agreement with the Paris Club creditors to restructure a total debt of 11.1 billion dollars. Before regularising its obligations with Japan, this year Havana took similar steps with Spain, Austria, France, Holland, United Kingdom, Italy, Denmark, Australia, Finland, Sweden, Switzerland and Belgium.

Through the agreement with the Paris Club, that group of creditor countries cancelled around 8.5 billion dollars of Cuba’s debt, accumulated in interests, while the government of Raúl Castro promised to pay in a period of 18 years the 2.6 billion dollars of the principal.

The Cuban authorities, which have also been able to restructure debts with China, Mexico and Russia, expressed their confidence that the agreement with Japan will open up the means of financing projects linked to the country’s development plans.

Both governments have stated their interest in expanding bilateral commercial relations in fields like medicine and the pharmaceutical and medical equipment industry. The regularisation of the debt eliminates the dark clouds.

Under Raúl Castro’s government, the Cuban government has carried out an intense organisation of its foreign finances with the aim of gaining international credibility, while it adopts legal policies and regulations to encourage foreign investments as a means to have access to capital and the technology this Caribbean nation needs.

The interest has also increased among the creditors to organise the Cuban accounts ever since this country undertook with the United States a dialogue to re-establish diplomatic relations and to normalise relations. (2016)

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