Russia restructures Cuba’s $277 million debt

If the communist Castro dictatorship doesn’t pay back loans from its allies, they are definitely not going to pay back loans from its enemies. Vladimir Putin has agreed to restructure the Cuban regime’s debt of $277 million composed of loans made between 2009 and 2019. The loan can be added to the billions Havana owes Russia, which it has failed to pay back.

This is how the Castro dictatorship handles foreign loans: they take the money, they don’t pay it back, and then they restructure it. Then the whole process is repeated. Think about this the next time someone says the U.S. should allow the Cuban regime to obtain loans from the U.S.

Via Diario de Cuba (my translation):

Putin once again approves a multi-million dollar debt restructuring for the Cuban regime

Vladimir Putin approved on Monday the modification of credit agreements between Moscow and Havana that grants Cuba better conditions for the payment of a multimillion-dollar debt, as well as its restructuring.

According to the EFE agency, the document endorsing the presidential decision was published on the Russian Government’s legal information portal.

The protocols approved by Putin, a close ally of Havana, refer to state credit agreements for Cuba granted between 2009 and 2019 for the purchase of hydrocarbons.

According to the Deputy Finance Minister of Russia, Alexei Sazanov, the debt contracted by Cuba under the approved restructuring agreements amounts to 277.2 million dollars.

The facilities granted to Havana include the possibility of settling the debt in rubles, postponing the payment plan from 2023-2027 to the period 2028-2040, and modifying the calculation of interest rates for delayed payments.

Russia considers that aiding the Cuban regime, aimed at ensuring its oil supply, will strengthen Moscow’s political positions in Latin America. This despite the fact that such supplies are now scarce, and the island is experiencing its worst electrical crisis since 2022, with simultaneous blackouts affecting up to 44% of the national territory and gasoline price increases exceeding 400%, as well as partial dollarization of its sale.

In April 2023, the Russian Foreign Minister, Sergey Lavrov, visited Cuba and, according to the Russian newspaper Kommersant, announced that Moscow and Havana had almost completed the agreement on the terms under which the island’s debt to the Kremlin would be restructured. As of February 2022, that amount was reported to be $471 million.

In August of that same year, Moscow granted the Cuban Government an extension until 2040 for the payments of a loan for the construction of a power plant that never materialized, and about which Havana has never accounted for.

Havana was supposed to pay interest on that loan in the amount of approximately 1.4 million euros. Initially, this sum was to be paid by February 28, 2022, but it was deferred to be settled by June 15, 2025.

According to that agreement, the interest amount that Cuba was supposed to pay from March 1, 2021, until the end of 2022, equivalent to about 2.2 million euros, could begin to be honored starting from June 15, 2028, and completed by mid-December 2040.

As for the principal debt, as well as a series of deferred payments and capitalized interests that Havana was supposed to start paying starting in January 2023, to be fully honored by the end of 2027, it was also shifted to between June 2028 and December 2040.

Additionally, the repayment of that loan will also be made in rubles, as previously it was in euros.

In 2015, Moscow signed an agreement with Havana to provide it with a state export credit of up to 2.2 billion euros. Those funds were supposed to be used, as reported at the time, for the construction projects of power units in the Cuban thermal power plants Máximo Gómez, in Mariel, and Ernesto Guevara, in Santa Cruz del Norte, according to the Russian news agency Interfax.

A 200MW power unit would be built in the first one, and three others of equal power in the second. The implementation of the project by the Russian side would be carried out by the company Inter RAO – Export, a leader in the sector in the Eurasian nation.

The initial terms of the loan assumed its use between 2016 and 2024. Havana would pay it off in ten years, with the first disbursements in the year of the launch of the energy units, which according to the original agreement, would be no later than February 1, 2025.

The loan was granted with an interest rate of 4.5% per annum. However, since then, there have been no reports of the immediate start of work on the project.

The official Cuban press does not mention this issue, despite being a new debt added to the billions owed by the Cuban government, which rarely honors the loans it receives.

In 2022, the official Russian press revealed that Moscow had lent Havana $2.3 billion between 2006 and 2019 to finance major projects in energy, metallurgical industry, and transportation.

In February 2022, hours before the start of the invasion of Ukraine, the Duma (lower house of the Russian Federal Assembly) ratified a debt restructuring project of $2.3 billion, negotiated by the president of that entity during a trip to Havana.

According to the Russian Duma, this project “provides for the restructuring of Cuba’s debt to Russia, within the framework of four intergovernmental loan agreements.”

Reports at the time indicated that since 2020, the Cuban government had stopped paying the debt and requested Moscow to review the credit conditions. In response to this request, on June 11, 2022, Vladimir Putin ratified the protocols to amend the signed agreements and postpone the payments.

In 2014, Putin had forgiven 90% of Havana’s debt from the USSR era, amounting to $35 billion, of which the Raúl Castro regime would only have to repay $3.5 billion.

1 thought on “Russia restructures Cuba’s $277 million debt”

  1. If you’re referring to the Soviet debt, that’s definitely never getting paid. Fidel Castro solved that problem by saying that since the debt was to the USSR and the USSR ceased to exist, there was no more debt.

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