Cuba defaults on Paris Club debt: says it will meet its commitments

The Cuban government has said that it will meet its commitments to service government debt, agreed with the Paris Club following a default on some repayments due in 2019. The commitment was contained in a letter sent by Cuban Deputy Prime Minister, Ricardo Cabrisas, to Odile Renaud-Basso, Director General of the French Treasury, who is also President of the Paris Club.

In the letter, Cabrisas wrote that Cuba acknowledged that “circumstances dictated that we were not able to honour our commitments with certain creditor countries as agreed in the multilateral Minute signed by the parties in December 2015”. He also noted that Cuba has “the intention of settling” its outstanding commitments by 31 May, the earliest “realistic” date.

“We intend to gradually liquidate all the commitments corresponding to the year 2019, that is, with Austria, Belgium, the United Kingdom, Japan, France and Spain until 31 May of this year,” Cabrisas wrote.

Earlier Reuters had reported that Cuba had failed to meet it restructured Paris Club debt repayments in 2019.

In an exclusive, quoting diplomats ‘with direct knowledge of the issue’, the news agency reported that Cabrisas visited Paris in January (See Cuba Briefing 20 January 2019) to meet with creditors, and to indicate that new US sanctions meant that Cuba had been unable to make some scheduled payments.

It quoted unnamed diplomats as saying that under the 2015 debt restructuring accord stiff penalties may now come into force. The 14-nation agreement was signed during the period of detente with the US.

The report said that the 2015 agreement forgave US$8.5bn of the US$11.1bn owing with such sums having to be repaid by 2033 or used in counter value funds for creditor nation investments in Cuba.

Under the agreement, interest was forgiven through 2020, and after that was repayable at 1.5% of the total debt still due, but will be charged at 9% if it is unable to meet its annual payment schedule in full, plus late interest for the portion in arrears.

Cuban and other reports indicate that both sides were working to save the accord which includes debt swaps that underpin some Paris Club nations increased economic and political presence in Cuba.

Effectively confirming this, Prensa Latina quoted parts of the AFP report noting that ‘President Díaz-Canel and other senior Cuban leaders have acknowledged that the country has financing problems because of the tightening of the US embargo’. It noted that Havana is increasingly reliant on the EU as an investor and trading partner. The letter, details of which were first published in a report by the French news Agency AFP, additionally indicated Cuba was aware of the importance of preserving the agreements with the Paris Club.

The Cuba group of the 19-member Paris Club is comprised of Australia, Austria, Belgium, Canada, Denmark, Finland, France, Britain, Italy, Japan, the Netherlands, Spain, Sweden and Switzerland.

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