Agreement with CAF could open door for funding

The Development Bank of Latin America (CAF) and Cuban Central Bank have signed an agreement that is expected to pave the way for Cuba to eventually be able to access development assistance from multiple sources.

The agreement, which was signed by September 1 by the CAF’s Executive President, Enrique García, and the Minister and President of the Central Bank of Cuba (BCC), Ernesto Medina, supports training and technical assistance, laying the groundwork for the future admission of Cuba as a member and shareholder in the regional bank.

Speaking to Granma, the Central Bank Minister President said: “This is a first step. Although we are not a member country, the organisation can arrange support through third parties or non-governmental organisations such as Green Funds, which promote the use and development of clean energy.”

Mr Medina told the official state publication that through these institutions Cuba could for example eventually access funding to help develop and deliver its objective that by 2030, 24% of all of the energy generated in Cuba will be based on alternatives to oil.

Although the agreement signed marks a first step in facilitating cooperation, it advances significantly the wish expressed by Mr Garcia in May 2015 that Cuba might become a member of CAF relatively quickly.

Speaking then, he said that the CAF was “not the sort of institution that arrives in countries and tells them what is the magic recipe.” “We respect differences,” he said.

Unlike other regional financial institutions, such as the Inter-American Development Bank, CAF does not require member countries to be part of the Organisation of American States, which Cuba left in 1962 and has, it says, no intention of rejoining.

CAF, which recorded assets of over US$32.5bn in 2015, and is the second largest lender to the region, was established in 1970 to promote sustainable development and integration in Latin America. It has 17 Latin American and Caribbean member countries, as well as Spain and Portugal and 14 private regional banks. Its main shareholders are Bolivia, Colombia, Ecuador, Peru, Venezuela, Argentina, Brazil, Uruguay, Panama and Paraguay.
Under CAF rules, before joining, Cuba would have to adapt to a series of norms and regulations, including the declassification of information on its reserves and accounting methods.

Speaking about the agreement signed in Havana, Mr Garcia said that it was a letter of understanding which would facilitate cooperation, enabling the CAF through consultants and other initiatives to contribute in areas that will help the Bank develop institutional quality and improve productivity. He also said that the CAF saw huge potential in Cuba.

The agreement signed also enables the CAF to work jointly with other international agencies such as the International Investment Bank and the International Fund for Agricultural Development to support the Cuban model.

Previously Mr Garcia…

This is an extract from the Caribbean Council’s weekly Cuba Briefing, a leading publication that provides detailed and accurate news on economic, social and political developments inside Cuba to corporate interests with a long term economic relationship with the island.

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