Cuba faces important payments of its foreign debt
2020 has not started well for Cuba in terms of paying its external debt. After delaying payment to the Paris Club in 2019, it is now on trial in London after the Cayman Isles mutual fund CRF I Ltd. Lawsuit filed for insolvency on a $ 1.4 billion claim that has been closed since 2009.
In 2018, this company and other creditors put forward a debt rescheduling proposal, but Havana did not respond, so the matter has now been taken to court.
CRF I Ltd. is a conglomerate of several companies selling materials related to the nuclear world, the military, radiological care, explosives detection and needs assessment in these fields including the medical field. In the case of Havana, the guilt is related to the acquisition of airport and clinical security supplies.
The company and its employees tried to contact the Cuban authorities last year but received no response. one of his executives accepted the British press.
“CRF is a major holder of Cuban trade debt and seeks a fair and equitable outcome for both Cuba and its trade creditors and will endeavor to work constructively with Cuba to that end,” its chairman David Charters told Reuters. “However, the board of directors of CRF has made it clear that the ongoing legal process will not be halted unless there is a satisfactory prior negotiated solution with the Cuban government.”
The Cuban government has until the end of the month to respond to the complaint. Otherwise, the UK court could set a much higher amount, taking into account the late payment fines and the interest incurred.
Cuba has faced a financial crisis for several years due to the worsening economic situation of Venezuela, its main partner and benefactor. According to IndexMundi, an analytical center devoted to polishing public statistics of all countries, Cuba’s external debt was $ 30 billion in 2017, around 170 million more than the previous year.
Creditors include the Paris Club, a group of fourteen European countries to which the island owed $ 82 million last year. But Cuba was unable to repay part of the agreed debts, which amount to around 33 million. Two weeks ago, Cuban Deputy Prime Minister Ricardo Cabrisas said signed a letter of intent promises that the amount in question will be liquidated in May.
It is not clear where the island gets the reserves it needs to settle its debts, given Cuba owes about 300 million to Spanish companies, one of the most invested countries on the island. In this context, the European Union has become the largest investor and first partner in recent years, with a trading volume of more than $ 3.470 billion in 2018.
The case of Spain and other European countries is easier to resolve because these nations have internal renegotiation mechanisms under the protection of laws and governments. The UK is more difficult because when it was part of the European Union, which gave up last month, London never passed a law to protect foreign investments.
For this reason, CRF I Ltd. decided to go to court to compel the Cuban government to pay the debt. When announcing the lawsuit last week, the British firm said it had significantly scaled back its previously unaddressed proposal but did not disclose the amount.