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Exclusive: Cuba may revive Paris Club debt negotiations
(Reuters) – Cuba and the Paris Club of wealthy creditor nations are working to resume talks over billions of dollars of official debt in a new sign the communist government is interested in rejoining the global economy.
A Paris Club delegation quietly traveled to Havana late last year to meet with Cuban bank officials, who were prepared with various proposals and appeared eager to strike a deal, according to Western diplomats.
Previous negotiations broke off in 2000 and obstacles remain to reviving serious talks, said the diplomats, who spoke on condition of anonymity because they were not authorized to speak publicly.
They said Cuba must first show creditors its books, which so far it has refused to do. Cuba considers its level of foreign reserves a state secret and publishes scant data on its current account and foreign debt, which it last revealed for 2010.
Still, the diplomats have taken Cuba’s readiness to talk as an indication it may be willing to play by the rules of international finance.
Although it is still a long way off, any deal with the Paris Club would significantly reduce Cuba’s debt, improve its reputation in financial markets and allow it to issue new debt.
In the latest of President Raul Castro’s market-oriented reforms, Cuba recently approved a foreign investment law that it hopes will bring in billions of dollars.
It has also embarked on a monetary reform that would eliminate its two-currency system, another hindrance to foreign investment, and it is about to begin talks with the European Union on forming a new bilateral relationship.
“The positive is that Cuba has more or less been restructuring and meeting its debt obligations for the last three years. The negative is that they think that is enough and do not understand that we must know their financial capacity to live up to whatever agreement we might come to,” one diplomat said.
In the past three years, Cuba has restructured its debt with China, Japanese commercial creditors, Mexico and Russia, each time obtaining substantial reductions in what it owed in exchange for payment plans it can meet.
The Paris Club is an informal group of 19 creditor nations: Australia, Austria, Belgium, Britain, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, Norway, Russia, Spain, Sweden, Switzerland and the United States.
The club has a special working group on Cuba that excludes the United States and it may be willing to waive the usual prerequisite of an International Monetary Fund agreement and be creative in looking for solutions, the diplomats said.
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H/T Regina A.