Cuba Business News and Information
By Marc Frank | Reuters
Cuba’s actively serviced foreign debt jumped nearly $2 billion in 2006 to $7.794 billion as foreign suppliers more than doubled their credits to the country, according to figures posted on the Web site of the National Statistics Office on Friday.
Most of Cuba’s new debt was believed by local analysts to be due to fresh credits from China and Venezuela.
In 2005, Cuba’s “active” debt, or debt on which Cuba pays interest and principal, stood at $5.898 billion. The so-called active debt was borrowed since the 1991 collapse of the Soviet Union.
Debt owed to suppliers jumped to 36.2 percent of the total last year, more than double the 16 percent share in 2005 as trade with China nearly doubled. Foreign supplier debt usually refers to financing extended with the shipments of goods to a country.
Venezuela extends up to 60 percent credit on its oil supplies to Cuba, thought it was not clear if all the loans were classified as being related to suppliers.
‘INACTIVE’ DEBT
Cuba last reported its “inactive” debt, or the debt it is not paying interest on and which was built up after Cuba defaulted on its obligations in the 1980s, as $8 billion in 2004.
That would mean total foreign debt could be close to $16 billion in 2006, given that most of the inactive debt is denominated in non-U.S. currencies that have appreciated against the greenback since then.
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Are there any macro economists out there? This seems like a pretty high number to me considering the fact that Cuba is not a very wealthy country.
Also, how much of this debt is really just a “gift”. For example, I don’t think Hugo Chavez is sending discounted oil on credit to Cuba as a good business decision. Same with the Chinese. They probably give “credit” to Cuba so they can buy all the nickel they need from Cuba.
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I’m no economist, you just have to view my personal bank statements to ascertain that. However, Cuba seems to play the bartering system, eg…you give us us cheap oil, we’ll give you doctors, nickel etc.
The rules of capitalist economic measurement don’t apply in Cuba. Therefore it’s futile trying to measure their economy using our economic rulers. Isn’t the US debt somewhere near the 10 trillion dollar mark?, and where are their doctors?
First I agree with ED that “normal” economic measures currently don’t mean anything in a closed society like Cuba, they would gain significance if Cuba dec ides to inch or move towards a market economy, even if still controlled.
When I read about the size of the debt regularly forgiven some 3rd world countries, it doesnt seem that Cuba’s is that high. Yes a growing trend, especially that large, is cause for concern, but then if I recall correctly, both the US national debt and the balance of payments keeps growing and no one seems to lose sleep over it.
