Credits in Sight: Cuba Reaches Historical Agreement with Paris Club


According to Havana Times, Cuba will close 2015 with magnificent news for its ailing finances. Recently, Raul Castro’s government and the Paris Club reached an agreement on the island’s debt that will secure a US $ 4 billion relief in interests due and reduce Havana’s outstanding debt to US $ 2.6 billion, payable in 18 years.

The agreement, announced in Paris, arrives after a long period of stagnation, and was catalyzed by the re-establishment of political exchange and economic cooperation between the island and European Union, and, especially, by the re-establishment of diplomatic ties with the United States.

The reduction of Cuba’s debt has been truly significant. In 2001, when talks with the Paris Club were suspended, Cuba’s total debt was estimated at US $35 billion, a figure which was later reduced to US $26 billion following direct agreements with a number of creditors. At one stage of the negotiations begun last March, the debt had been set at US $15 billion.

The agreement was reached during a round of negotiations in Paris between December 10 and 12. The final steps were aimed at determining the payment term and amount payable by Cuba.

In fact, these concessions for Cuba are sustained by promises for the majority of creditors, who appear willing to relax their payment demands in exchange for advantages in terms of setting up businesses on the island.

“This agreement paves the road to a new stage in relations between Cuba and the international financial community,” French Minister of Finance and Public Accounts Michel Sapin announced in a communiqué.

The terms of the agreement could not be more favorable to Cuba’s strategy, aimed at inserting the island in the international financial system and securing generous credits for the mid-term to bolster its domestic economy.

Money won’t begin flowing into the island’s economy and banks right away, but this is a first step towards establishing the atmosphere of confidence that the Cuban government seeks to secure in its attempts to attract investors, following the promulgation of the Foreign Investment Law.

Sapin announced that the French Development Agency will soon resume its activities, as President Francois Hollande promised during his visit to Havana last May. [. . .]

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