Rueters today Reports Cuba near a deal with Paris Club to restructure $16 billion in debt
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Rueters today is reporting that Cuba is near a deal with 15 rich creditor nations of the Paris Club to restructure $16 billion in debt stemming from a 1986 default.
The Paris Club is an informal group of creditor governments from Australia, Austria, Belgium, Britain, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, Norway, Russia, Spain, Sweden, Switzerland and the United States. The U.S. is not part of this reported effort.
According to the report, the parties will meet in Paris later this week and, after two years of informal discussions, are close to a multilateral deal, the diplomats said. Earlier press reports allege that Cuba and the U.S. will meet in Havana tomorrow to consider settling property claims.
An unconfirmed diplomatic source reports that Cuba has agreed to pay the principal of around $5 billion owed since its 1986 default in exchange for forgiving $11 billion in service charges, interest and penalties with the focus on payment terms, and how much of the repayment will be reinvested in Cuba by the creditor nations.
It has been previously confirmed that Cuba has secured investment agreements from creditors in previous debt negotiations and is seeking similar commitments from the Paris Club nations other than the U.S.. Most of the creditors are willing to show flexibility due to their increased interest in doing business in Cuba following its detente with the United States and continuing domestic reforms.
It is accepted in the world community that Raul Castro has made restoring Cuba’s international financial credibility a priority. He has reined in imports and cut state payrolls and subsidies while insisting the near-bankrupt government get its financial house in order. Cuba has had a trade and current account surplus since 2011 and has improved its payments record to creditors and suppliers.
At an economic seminar I attended in October in Havana, it was established that Cuba sets aside over 20% of GNP to pay down debt and set up international reserves, in its quest to strengthen its balance of payments accounts, a strong indicator of a countries financial strength. It is believed that in the past four years, Cuba has restructured its debt with Japanese commercial creditors, Mexico and Russia, each time obtaining reductions of 70 percent to 90 percent in what was owed and extended payment plans it could meet in exchange for greater investment opportunities on the island and tht Cuba also has restructured its debt with China, estimated by local economists at more than $6 billion.
It is reported that this week’s formal negotiations with the Paris Club creditors are the first since negotiations failed in 2001.