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    Did the regime pay its creditors 5.29 billion?

    Did the regime pay its creditors 5.29 billion?
    ROBERTO ÁLVAREZ QUIÑONES | Los Ángeles | 10 de Febrero de 2017 – 14:56 CET.

    The anxiety affecting the dictator and military higher-ups in charge of
    Cuba is palpable, eager to dispel their bad international reputation for
    non-payment, as they yearn to attract unwary foreign investors and
    receive loans so that they can line their pockets as soon as possible,
    as they see time running out on them.

    This can be inferred when, according to former Economy Minister José
    Luis Rodríguez, in 2016 the Government paid over 5.29 billion dollars to
    its foreign creditors. However, many doubts and questions remain in the
    air that, of course, will never be answered, given the regime’s secrecy.

    To begin with, it is astonishing that the Government was able to pay its
    creditors that kind of money, a huge sum given the size and very poor
    performance of the Cuban economy, which had its worst year in a long
    time, to the point that, for the first time in decades, it actually
    admitted that the Gross Domestic Product (GDP) had decreased.

    This payment was, apparently, made in the context of plummeting
    subsidies from Venezuela and Brazil, and the low prices for Cuba’s few
    exportable assets, while nearly 40% of the country’s land remains
    unharvested, idle and overrun by marabou. Its industrial sector,
    meanwhile, is burdened by a lack of raw materials and the inexorable
    deterioration of the economy as a whole. Without cash for imports, the
    chronic economic crisis worsened dramatically.

    No less shocking is that this good news for the financial image of the
    regime was not publicly announced by a high-ranking Government official,
    but by a former minister who is now writing the same kind of boring,
    nonsensical, rigidly socialist articles he drafted when in the 80s he
    was the deputy director of the World Economy Research Center (CIEM),
    where he is now an advisor.

    The fact that it was Rodríguez who gave the figure to CubaDebate (which
    debates nothing) raises doubts, as he was the minister (1995-2009) to
    which Castro assigned the task of skewing, more than anyone, the
    official economic statistics and figures.

    It suffices to recall that in December 2006 Rodríguez claimed, without
    blushing, that Cuba’s GDP that year had grown by 12.5%, the highest
    increase recorded in the recent history of Latin America, and the
    highest in the world that year, outperforming even China, whose GDP grew
    by 10.7%. Of course, shortly thereafter leading economists on and off
    the Island in 2006 concluded that Cuba’s GDP had actually risen 3.2%, a
    third of that officially announced.

    Where did they get so much money?

    In any case, such a large sum of payments to creditors does not seem
    credible, and we must take into account here the Castroist practice of
    falsifying statistics for political purposes.

    This culture of statistical manipulation was introduced by Ernesto “Che”
    Guevara in the early 1960s. As the fledgling president of the National
    Bank he was incensed to learn that Cuba’s GDP in 1959 had grown by only
    1%, so he ordered that it be calculated in another way, so as to inflate
    it and project a “good image” of the Revolution.

    The questions in this case are: where did so much money to pay creditors
    come from? To what extent did the dictatorship further impoverish the
    people in order to pay? Was there some behind-the-scenes benefactor who
    gave that money? Or is Castroism just lying again?

    The only good news would be a Disney-like fantasy: that Houdini suddenly
    reappeared and turned the CUC into a genuine freely convertible
    currency. Any other answer entails a maneuver exacerbating poverty and
    hunger in Cuba. Or the Government is lying.

    32 years ago, in 1985, Fidel Castro established himself as a
    standard-bearer for Third World countries’ refusal to pay their debts.
    He organized international conferences in Havana as he promised not to
    pay a penny more to creditors, because it was they who had a “huge moral
    and financial debt” for their 400 years of “colonial and neocolonial

    In July of 1986 Cuba stopped payments: no principal, no interest. But
    the regime instantly became an international pariah with which no one
    wanted to do business. And it didn´t have a “friend” in the
    international community willing to back it up.

    It is normal for developing countries to post trade deficits and
    negative international payment balances, as they need to import
    technology, capital goods, raw materials, and equipment. For this they
    receive loans, which they pay back through economic growth. However, in
    a centrally planned economy technological and capital resources are not
    taken advantage of, as there is waste, theft at factories, and very low
    labor productivity. The economy does not grow, loans are not paid back,
    and suppliers stop selling and lending money. That’s just the way it is.

    Cuban debts increased due to unpaid interest. From an original debt of
    some 6 billion dollars with the Club de París (in 1986), according to
    AFP, by the end of 2014 it had risen to 15 billion. In March of 2015 the
    head of this group, Bruno Bezard, travelled to Havana. There were
    negotiations and other creditors did the same.

    The elite want to get rich, and now

    Creditors, convinced they were no longer going to collect anything,
    decided to cut their losses: Japan wrote off 80% of Cuba’s debt just to
    collect at least 20%; Mexico forgave 70%; and other countries followed
    their leads. Russia went further and forgave 90% of the 35 billion
    dollars that Cuba owed the former Soviet Union, debt that Moscow had
    already given up on recovering.

    In exchange for these debt cancellations, Havana promised to gradually
    pay back the unforgiven balances, with the corresponding interest. The
    ruling caste must follow through on these commitments if it wants to
    receive any loans in the future.

    Several conclusions are possible from all this, all of them speculative,
    because there is no way to verify anything when it comes to Castro’s
    financial authorities. First, it is likely that the figure cited of over
    5.29 billion was inflated, and that the amount paid was much lower.

    If that amount was really disbursed it is because the commanders,
    generals and leaders of the Communist Party (PCC), the owners of the
    country, are truly desperate for loans and investments. They know that
    they do not have much time left to get rich, as the Castro regime is
    faltering, in every way.

    And those officers might be asked: Do you truly believe that you are
    going to secure the 2.5 billion a year you want in investments and loans
    without dismantling Cuba’s structure of Stalinist, anti-capitalist
    legislation? Please…

    But, apparently, they believe they will, so they probably sacrificed
    imports of food, medicines, consumer goods, etc., thereby aggravating
    the misery of the Cuban people.

    It could also be that Colombia’s FARC drug traffickers, grateful for
    Castro’s role in the peace agreement, favorable for the guerrillas, and
    in response to pressure by Caracas, spurred them to “lend” General
    Castro a good portion of those billions of dollars, to pay his creditors.

    Source: Did the regime pay its creditors 5.29 billion? | Diario de Cuba