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.
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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.
Follow Nora Gamez Torres on Twitter @ngameztorres