The Paris Club, a financial organization consisting of officials from 22 developed creditor countries, has reached an agreement for a moratorium on Cuban debt payment this year.
The decision was questioned by the US administration which is attempting to cut off financial relief to Cuba. Although the US is a member of the Paris Club, it does not have the right to veto which implies that it cannot prevent the decision of other members.
Some of the 22 members of the Paris Club are distancing themselves from the decisions by the US administration. Cuba has earned a certain respect from the international community including some Western powers in its handling of the COVID pandemic.
The decision removes some pressure facing the Cuban economy in the midst of the global COVID-19 pandemic and harshening of US sanctions during this time.
In May of this year, Cuba requested the two-year suspension of debt repayment to the Paris Club (until 2022) based on the impact of COVID-19 on its economy.
Five years ago, Cuba reached a deal with its Paris Club creditors to restructure debt until 2033. Within that agreement, Cuba would pay $2.6 billion of arrears over an 18-year period and wipe out $8.5 billion of outstanding debt.
Since that time Cuba received debt forgiveness from other nations including Russia ($35 billion), Spain ($1.88 billion), China ($6 billion), and Mexico ($500 million).
Various sources report different figures regarding the total amount of the debt but only part of it is being negotiated within the framework of the Paris-based creditor group.
Cuba has negotiated the moratorium with a group of creditor countries with whom it maintains political and commercial relations, among them Canada, Spain, Japan, the United Kingdom, Italy, and Germany.
What is evident is the improvement of economic relations between Cuba and the European Union. Over the past several years, steps have been taken to normalize and expand those ties.
Paris Club has joined the Group of 20 nations’ biggest economies in delaying a possible $12 billion in debt payments from the world’s most vulnerable countries during the pandemic.