Cuba paid more than $5 billion in foreign debt last year but the economy is still dragging
Cuba paid more than $5 billion in foreign debt last year but the economy
is still dragging
BY NORA GÁMEZ TORRES
The Cuban government reportedly paid $5.2 billion in 2016 to meet its
commitments after an extensive restructuring of its foreign debt in the
midst of an ongoing economic crisis not likely to improve this year.
Despite growth in tourism — with a 15 percent increase in revenues for
the first half of 2016 that amounted to some $1.2 billion — the Cuban
economy will remain in the red this year, dragged down by foreign debt
obligations and the economic crisis in Venezuela, which provides
significant oil subsidies to the island nation.
While the Cuban government and the Economic Commission for Latin America
and the Caribbean, which uses the same official figures, predicted that
the Gross Domestic Product (GDP) will grow by two percent this year,
economist Pavel Vidal predicts a decrease of between -1.4 and -0.3
percent, according to the latest report by the Cuba Standard Economic
Trend Index (CSETI).
The economic reforms undertaken by Cuban leader Raúl Castro “had
promised a GDP growth of 5.1%, which was then adjusted to 4.4%. But the
true average growth from 2008 to 2016 was barely 2.3%,” the report
states. “The ending couldn’t have been any more discouraging, with a
recession in 2016 (-0.9%), and very uncertain projections for 2017 in
terms of a rapid reemergence from the crisis and of what could happen
with the Trump administration.”
Vidal, a professor at the Javeriana University in Colombia and a former
official at the Cuban Central Bank, is the creator of the CSETI, an
index to measure the Cuban economy — published quarterly by Cuba
Standard — that correctly predicted the economic contraction in 2016.
Vidal estimates that the Cuban government missed a payment of nearly 800
million dollars to providers and short-term debt contracts last year.
However, the government did pay the annual amount agreed after the
restructuring of its external debt with several members of the Paris
Club, according to former Cuban Minister of Economy, José Luis Rodríguez.
“…to attract important volumes of foreign investment and new credits
in more favorable conditions, it was planned to pay around 5,299 million
of dollars ($5.2 billion) last year, a figure that according to the
information provided in the ANPP (National Assembly of People’s Power)
was fulfilled, although a share of the short-term trade credits could
not be paid,” Rodríguez said in an article posted on the Cuban website
Castro assured the Assembly at the end of last year that there would be
a “strict fulfillment of the obligations incurred as a result of the
rearrangement of the Cuban external debt,” without providing figures. He
added that it was not possible to “overcome the temporary situation that
we are going through in the delay of payments to providers.”
The reported foreign debt payment would have far exceeded revenue from
tourism last year, which Cuban economist Carmelo Mesa Lago estimates at
nearly $3 billion, as the official numbers have not yet been released.
The government provides no official figures of remittances from Cubans
abroad to relatives on the island, another important source of revenue
that could amount to another $3 billion, according to the Havana
But oil supply from Venezuela significantly decreased to 55,000 barrels
per day in 2016, as reported by Rodríguez — from 120,000 during the best
of times. Cuba has also lost around $1.3 billion in revenue from exports
of medical and other services to Venezuela, according to projections
made by island-based economist Omar Everleny Pérez.
“Whether Cuba overcomes its economic and financial crisis or whether it
deepens will depend, more than anything, on whatever happens with the
Venezuela agreements,” the CSETI report concludes.
“The eternal problem of Cuba is that it is a parasitic country, first
parasite of the Soviet Union and then Venezuela,” Mesa Lago said. “After
58 years of government, they have failed to develop an economic
structure that is capable of producing enough to import and develop,” he
Nora Gámez Torres: @ngameztorres
Source: Cuba paid more than $5 billion in foreign debt last year | Miami