CUBA-ECONOMY: Informal Talks on Re-Scheduling Debt Begin

By Dalia Acosta Reprint | | Print |

Dalia Acosta

HAVANA, Nov 1 1995 (IPS) - Cuba’s National Bank has begun to make informal contacts with the country’s biggest foreign creditors, in order to seek “constructive”, “creative” and “viable” solutions to the country’s foreign debt, Bank president Francisco Soberon announced.

After several years of silence regarding the amount of the debt, senior government officials revealed last week that Cuba owed 8.6 billion dollars by early 1995.

The figure is the first to be made public since the late 1980s, when it was estimated at 6.4 billion dollars. But it does not include debt with the former Soviet Union and eastern European countries.

Authorities consider the debt to the former socialist bloc, seen as “unquantifiable” by many experts, as a case that must be analysed separately.

During an Oct. 24-25 meeting of entrepreneurs held in Havana, it was revealed that Soberon had met with creditors from Japan, France, Canada, Great Britain and Spain the previous month.

Insider sources at the National Bank told IPS that in the last five months, that institution has received delegations from some 40 banks, mainly from Europe and Latin America.

And the president of the Paris Club, Cristhian Noyer, announced on Oct. 25 that informal talks on Cuba’s foreign debt will get underway shortly.

Although the Paris Club can only officially re-schedule the debts of countries belonging to the International Monetary Fund, of which Cuba is not a member, Noyer said his group is seeking an informal accord with Havana at the request of several European and Latin American countries.

In the 1980s, Cuba was able to re-schedule its debt.

Soberon said government efforts are aimed at helping Cuba gain access to medium-term bank and government loans.

A return to capital markets is among the government’s main aims, part of a policy designed to confront the internal and external financial imbalance that characterises the Cuban economy.

Negotiations on the foreign debt are part of a series of measures designed to seek capital – including payment of the debt, reforms of the banking sector, the flexibilisation of foreign investment and the establishment of a stock market system.

Since Cuba refused to comply with its commitments to the Paris Club as part of an international campaign against the unpayable conditions of the developing world’s foreign debt, the island has not received medium or long-term credit.

According to Soberon, that situation pushes up the costs of any operation, and works against the slight recovery that began to be seen in the Cuban economy in late 1994, when after a three year slump, the economy grew 0.7 percent with respect to 1993.

In October, Vice-President Carlos Lage, Cuba’s main designer of economic policy along with President Fidel Castro, announced a 2.3 percent growth of the Gross Domestic Product so far this year.

But official sources say that only access to credit and other sources of financing will relieve the pressure applied by the country’s lack of financial resources.

A study by economists Alfonso Casanova and Juan Triana states that “the foreign debt continues to be one of the main factors that limit the country’s full access to the capital market, which is essential for achieving the necessary levels of economic growth.”

But Soberon warned that the island’s creditors should be realistic, and not forget the state of the Cuban economy.