Photo by Jeremy Zero
Cuba and its Paris Club creditors have agreed to reschedule the repayment of the country’s outstanding medium and long-term government debt. The decision came at a meeting in Paris on 9-10 June between Deputy Prime Minister, Ricardo Cabrisas, and members of the Club’s Ad Hoc working group on Cuba.
According to a joint statement issued after the meeting, the agreement ‘provides additional time for the Republic of Cuba to honour several payments due under the 2015 agreement, while maintaining the current value of these amounts’. It noted that the two parties confirmed ‘their desire to preserve the 2015 agreement and their commitment to ensure the full implementation of this agreement’ which it observed ‘allowed a normalisation of financial relations’.
Cuba’s Ministry of Foreign Affairs (Minrex) additionally said that the annual meeting with Cuba’s Paris Club creditors had agreed to the rescheduling of the country’s medium and long-term debt and to amend the 2015 agreement. Minrex added that at the meeting Cuba ‘reiterated its commitment to comply with the obligations contracted with its creditors, and in particular, within the framework of the ad-hoc group of the Paris Club’.
No rescheduling details have emerged, but Cuban reports indicate that during the meeting the Cuban delegation updated the group of creditors on the impact of COVID 19 on Cuba’s economy and earnings from tourism; the effect of the intensification of the US embargo; and the costs associated with changing weather patterns caused by climate change. The meeting also heard about the measures Cuba is adopting for the recovery of its economy, including the process of currency unification, and about developments relating to its candidate vaccines.
Emmanuel Moulin, Director General of the French Treasury who is also the President of the Paris Club, led the working sessions on behalf of the group of Cuba’s creditors. According to Minrex, the agreement followed what it described as earlier ‘constructive’ exchanges and ‘mutual understanding’ when a technical mission headed by the Co-President of the Cuban Creditors Group, William Roos, visited Havana from 22-25 May.
In November 2020, Paris Club creditors agreed to waive Cuba’s 2020 restructured debt repayments at a cost. At the time, Reuters quoted an unnamed Western diplomat from a creditor nation as saying “We are united in our belief that the agreement should be saved and think the Cubans agree. That is why we waived payment, but not the penalties”. It also noted at the time that future Paris Club negotiations with Cuba will address unpaid maturities and penalties, as well as a scheme of payments. Reuters also reported that the interest on overdue payments was believed to be in the region of 9% per annum.
Originally signed in 2015, the Paris Club agreement forgave US$8.5bn out of a total Cuban debt of US$11.1bn owed to its members, with a commitment to pay the remaining amount plus interest in instalments up to 2033. As a part of the agreement, most creditor nations subsequently reached debt swap agreements against new investments through the establishment of counterpart funds. However, Cuba defaulted on its debt repayment obligations in 2019, and in 2020 requested a two-year moratorium on US$200mn due but accepted the Paris Club’s offer of a one-year break.
Last year was the first time Cuba had missed a complete payment since the restructuring agreement was signed in 2015. The Cuba group of the Paris Club consist of Australia, Austria, Belgium, Canada, Denmark, Finland, France, the UK, Italy, Japan, the Netherlands, Spain, Sweden, and Switzerland.
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