Cuba: Creditors Will Forgive Billions of Dollars in Debt

Cuba reached an agreement to restructure its debt, canceling US$4 billion in interest and promising to pay US$2.6 billion over the next 18 years.

The agreement outlines a final sustainable solution to the question of arrears owed by the island, with US$11.1 billion of debt forgiven in exchange for a payment of US$5 billion in principal.

"This agreement definitively resolves the medium and long-term issue of debt, which had not been paid since the 1980s," said French Finance Minister Michel Sapin on Saturday.

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Cuba explained its financial situation, including plans for development, during its meeting with the Paris Club, an informal group of the world’s richest lender nations founded when Argentina was renegotiating its debt.

Between 1983 and 2014, the Paris Club signed more than 430 agreements with 90 debtor countries, amounting to US$583 billion. Many countries in Latin America met with the group in the 1990s, as a result of the harsh measures imposed by International Monetary Fund and other international lenders.

"The execution of the payments with a formal commitment from Cuba to regularize its arrears is a necessary and important step for the normalization of financial relations between the two sides," read a statement from the group.

France is the main creditor of the island and emphasizes that "the overdue interest will be fully canceled."

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Other creditor countries include Australia, Austria, Belgium, Canada, Denmark, Finland, Italy, Japan, Netherlands, Spain, Sweden and the United Kingdom.