Cuba reaches an agreement with the Paris Club on repaying its debt

Cuba reaches an agreement with the Paris Club on repaying its debt
BY NORA GÁMEZ TORRES
ngameztorres@ElNuevoHerald.com

The Cuban government has agreed that it owes $15 billion to the
exclusive group of nations known as the Paris Club, after Cuba declared
itself in default in 1986, according to a report from Reuters quoting
diplomatic sources.

The figure agreed to includes principal, service charges, interest and
fines that Cuba owes 16 Paris Club nations from its 1986 default,
Reuters reported on Monday. However, it does not include compensation
fees levied by the United States for private properties confiscated by
the Cuban government since 1959.

The Paris Club is an informal group of creditor governments and
institutions composed of 20 permanent member countries: Australia,
Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland,
Israel, Italy, Japan, the Netherlands, Norway, Russia, Spain, Sweden,
Switzerland, United Kingdom and the United States.

The agreement reached with the Paris Club advances negotiations on the
terms of payment, the first since negotiations failed in 2001, in part
due to a $35 billion debt owed to the former Soviet Union, Cuba's
primary benefactor before its collapse in 1991. In July, President
Vladimir Putin agreed to forgive nearly all of that debt and pledged to
reinvest payments made by the Cuban government toward development
projects on the island.

"This agreement is another sign of the political will of the Cuban
government to rejoin a reasonable credit system at the normal level of
the world economy, in accordance with the norms of international
financial standards," said José Oro, director of research division of
Cuba at Thomas J. Herzfeld Advisors Inc. investment firm in Miami Beach.

Oro said the decision was "relevant" to the Cuban government, which "is
devoting a disproportionate amount of its income to pay the debt
service, with negative effects on import capacity and domestic
investment." The expert also noted that the agreement is the result of a
new climate resulting from a thaw in relations between the United States
and Cuba, which many affluent nations view as creating better investment
opportunities on the island, in industries such as tourism.

The Paris Club has been in negotiations with Cuba since late 2013,
according to various media reports, through a task force, which the
United States is not a part of. Some of the organization's members, such
as Russia and Germany, have already negotiated bilateral agreements for
debt repayment.

Cuba has long sought to have its foreign debt forgiven, blaming history
and economic dependency imposed by Western nations for its economic woes.

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Source: Cuba reaches an agreement with the Paris Club on repaying its
debt | Miami Herald Miami Herald -
http://www.miamiherald.com/news/nation-world/world/americas/cuba/article23605798.html