Weakened by the pandemic, Cuba, request a break to its creditors

Fragilisé par la pandémie, Cuba demande une pause à ses créanciers

Fragilisé par la pandémie, Cuba demande une pause à ses créanciers

The agreement with the Paris Club is crucial for Cuba: in 2015, it is with this instance that it had negotiated the restructuring of its debt owed to 14 countries, to erase 8,5 of $ 11.1 billion due.

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May 20, 2020 20h02

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Weakened by the pandemic, Cuba, request a break to its creditors

Katell Abiven

Agence France-Presse

HAVANA — Weakened economically by the impact of the pandemic, Cuba wants to suspend until 2022 repayment of its debt to the Paris Club, hoping to benefit from the same leniency that the african countries with the G20, according to several diplomatic sources interviewed by theAFP.

For this, the deputy prime minister Ricardo Cabrisas has written to the group of 14 creditor countries of Cuba, mostly from europe (France, Spain, Uk, Italy…) but that also includes Japan, Australia and Canada.

In this letter, “Cuba is calling for a moratorium for 2019, 2020 and 2021, in order to recommence to be paid in 2022,” said a diplomatic source, an information confirmed by two other diplomats.

Faced with a strengthening of us sanctions, the government had already requested a delay, until the end of may, to finally repay its maturities to 2019.

The agreement with the Paris Club is crucial to the island socialist: in 2015, it is with this instance that it had negotiated the restructuring of its debt owed to 14 countries, to erase 8,5 of $ 11.1 billion due.

The balance was to be converted into investment projects, to be phased until 2033 (Cuba should be reimbursed $ 82 million by 2019).

This was completed to put the country back on the rails, after erasing almost the total of his debt by China in 2011 ($6 billion), Mexico in 2013 ($500 million) and Russia in 2014 ($35 billion).

Panic

But the pandemic is blowing a wind of economic panic on the island.

Tourism brought $ 3.3 billion in 2018: but since march 24, no foreign visitor is not allowed.

A vacuum that threatens a third of the private entrepreneurs in Cuba (restaurants, rental of rooms etc.), or 200,000 workers, according to a study by the consulting firm Auge.

As for the “remesas” – money sent by Cubans abroad to their families in the country-estimated by the economist Carlos Mesa-Lago of $ 3.5 billion in 2017, they are a valuable support to the everyday life of many families.

“If the economic damage in Florida (where there is a large cuban community, editor’s note) are significant, then they will drop and this will have an impact on the lives of people”, warns the think-tank, Interamerican dialogue, fearing that “a humanitarian crisis”.

Fragilisé par la pandémie, Cuba demande une pause à ses créanciers

Tourism brought $ 3.3 billion in 2018, Cuba.

Archives Press

Another major source of foreign currency (us $ 6.3 billion in 2018), sending doctors abroad has been negatively affected by the return of 9 000 of them on the bottom of estranged diplomatic, in particular with Brazil, with which Cuba is in default of payment since mid-2018.

The recent shipment of medical brigades in 24 countries to help against the coronavirus appears to be insufficient to compensate for this financial loss.

Imports reduced by 75%

The minister of Economy Alejandro Gil warned: “This is the time to work on our reserves,” because “we must save all we can”.

The island, which imports 80% of what it consumes, “was reduced to 75% of its imports in the first quarter”, for lack of foreign exchange to pay for them, ” notes the economist Omar Everleny Pérez: “this is worse than under the special Period!”, the terrible economic crisis of the 90s.

What worsen shortages and lengthening queues, already recurring.

In the Face of the food emergency, “the government has made planting crops of short-cycle, to harvest in three months”, but “we are entering the hurricane season”, potentially devastating for agriculture, is concerned, Mr. Pérez.

In calling for a moratorium, Cuba wants to avoid falling in default in the payment total as in 1986.

The island hopes to take advantage of the mercy of circumstance, while the G20 has suspended for one year the debt service for the poorest countries, including a quarantine in Africa.

The world Bank and the IMF have promised to be at the bedside of the weakest countries… but Cuba is not part of any of the two instances.

And his financial problems had begun well before: with Donald Trump, the american embargo enforced since 1962, has strengthened, with pressures on banks and foreign companies working with the island and a restriction of visits of Americans.

The number of tourists has declined from 9.3% in 2019, a decline that was accentuated on January-February 2020 (-16,5%), even before the border closure.

Therefore, in 2019, the island was unable to resolve in time on its debt – as provided for in the agreement with the Paris Club – with six countries (France, Spain, Belgium, Austria, the United Kingdom, Japan), leaving them with a slate of more than 30 million dollars.

Le Soleil

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