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Posted June 10, 2009 by publisher in Business In Cuba

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By Marc Frank | Reuters (bold below by me for emphasis)

Cuba has rolled over 200 million euros in bond issues that were due in May, as the country’s central bank asked for another year to repay foreign holders of the debt, financial sources in London and Havana said this week.

The move is yet another sign the Communist-run nation is suffering a cash crisis, as it struggles with sharp declines in revenues from tourism and key exports due to the global economic crisis.

The two-year euro-denominated bonds of 150 million euros and 50 million euros that were rolled over were issued on the London Stock Exchange on May 3, 2007, at interest rates of 9 percent and 8.5 percent respectively. They were held mostly by Cuban entities, though some foreign banks with a history of providing credit to the island also participated.

“Apparently the Cuban Central Bank asked one more year for repayment to these foreign entities,” a European diplomat said. The statement was confirmed by one of the non-Cuban debt holders, who spoke on condition of anonymity. (of course the Cuban government won’t confirm anything)

“The issue with maturity in 2009 had been subscribed 85 percent by Cuban banks and 15 percent by foreign banks and entities,” the diplomat said.

Stuart Culverhouse, chief economist at London-based brokerage firm Exotix, which trades in exotic debt such as Cuba’s, said there was apparently a high participation rate in the rollover by the bondholders. (what choice do they have?)

“Cuba had been talking to holders in advance to negotiate rollover and was believed to have achieved a high rate of participation before the maturity date, but the exact terms are not clear,” Culverhouse said.

When Cuba issued its first global debt issue in decades—a one-year, 400 million euro ($524 million) bond that was paid off in February 2007—former Central Bank President Francisco Soberon said it was evidence of the increasing confidence of international financial markets in “the honesty and seriousness of the Cuban government.” (how’s that going Mr. Soberon?)

But there are increasing signs now that Cuba’s finances face severe strains. Foreign businesses have had difficulty this year transferring funds abroad from their accounts in Cuba or even making significant withdrawals. (that’s because real money doesn’t exist in Cuba)

Western commercial representatives and businessmen estimate that $600 million, and perhaps more, is tied up in the banks, where employees say there simply is no money to transfer or cash for significant withdrawals.

The central bank, which named Ernesto Medina as its president following Soberon’s resignation last week, has also been working to restructure some of its active debt, estimated at around $11 billion.

Cuba’s chronic trade deficit increased 70 percent last year to nearly $12 billion, the government reported.

Cuba’s 2008 service exports, which are not included in trade deficit, were $9.2 billion, but local economists estimate the current account measuring the inflow and outflow of foreign exchange still fell $1.5 billion to $2.5 billion into the red, after registering a $500 million surplus in 2007.

Cuba’s reserves are a state secret (gee, I wonder why they have to pay 9% interest rate), but were drawn on heavily last year after three hurricanes struck the Caribbean island.

The government has imposed drastic cuts on nonessential imports and energy and other state consumption this year as revenues from tourism and key exports led by nickel declined.

“The US veto stops them from going to the IMF, World Bank or Inter-American Development Bank,” a foreign banker said, referring to the 47-year-old US trade embargo against Cuba. (I would like to know more about this. Is this true? I thought Fidel was proud not to be part of the IMF)

“Their own model stops them from a big sell-off of assets,” he added. (That’s called being between a rock and a hard place and that won’t change until Fidel is dead.)

“They are taking drastic measures and that should improve their balance sheet, but I see no big influx of fresh cash so they will keep trying to push debt payments into the future.” (and so it goes, just another day in Cuba)

  1. Follow up post #1 added on June 11, 2009 by grant

    Cuba is a country where if possible the government is obligated to provide health, education and food products for their citizens. The drop in nickel ore prices has obligated the government to dip into the reserves(about 3 billion us dollars) and to sell more overseas of it’s venezuelan oil to provide for their internal markets and health and education supplies. Most countries would let their citizens starve and close hospitals and schools laying off staff or like in British Columbia, Canada tear up the wage agreements..

  2. Follow up post #2 added on June 11, 2009 by publisher with 3905 total posts


    You are too funny. How’s the free health care and free food programs going in Cuba? Great right? No?

    Must be that darned Embargo again.

    Here’s a concept… how about letting the Cuban people be free to be entrepreneurs and invest in their own business and buy land and real estate and bring in investors?

    No? Too risky. The Cuban people are much better off with Fidel and Raul taking care of them.

    Cuba’s economy sucks because it is a centrally controlled Communist economy that is broken and has ALWAYS been broken.

    Cuba’s economic model can ONLY survive when countries like Russia, Venezuela and China give it free cash, products and services and that’s no way to run a country.

    Cuba consulting services

  3. Follow up post #3 added on June 11, 2009 by grant

    Ask the USA banks and Ford and General Motors.How do they survive.

  4. Follow up post #4 added on June 11, 2009 by grant

    Mostly held by cuban entities?????. Too bad the american companies did not take the 20 year bonds offered in the early 1960’s for the american owned property in Cuba, would of been paid off long ago.

  5. Follow up post #5 added on June 11, 2009 by grant

    Health care in Cuba, one of the best, health care is mainly people. My brotherinlaw who is a medical doctor(retired)  indicates that many hospitals for the people have been rebuilt with renovated facilities and new equipment.Subsidized food is the norm.

  6. Follow up post #6 added on June 11, 2009 by Yeyo with 411 total posts

    You say “Most countries would let their citizens starve and close hospitals and schools laying off staff…”
    In Cuba, once the kids reach 7 years, the government suspends the subsidized milk.  During the important growing teen years the kids in Cuba don’t have milk. Cuba have closed hundreds of sugar mills, hundreds of factories of all kind of stuff sending all the workers home, sold most of his merchant and fishing fleets (over 200 ships) and sent all the sailors home. I would not say that most people starve in Cuba but the fact is that the “subsidized food” is mostly symbolic and would not last over a week and from there on the food on the hard currency grocery stores is more expensive than in the US or Canada.

    Do not try to justify the current crisis with the prices of Nickel going down, they are going down because were up and still the situation in Cuba was not much better than now.  That has been the Castro discourse for the last 50 years, if the sugar production was down the causes normally were the embargo, no rain or to much rain, it was never the tremendously inefficient bureaucracy or Castro disastrous administration skills. The catastrophe in the economy has been always justified by the low or high prices of the sugar, nickel, tobacco, oil etc.

    I agree that the Cuban Doctors are very good, however the Health Care System is in crisis and has been for long time now, the “rebuilt hospitals” (except the ones kept to be show as an example of the success of the revolution) most hospitals are in terrible conditions, no light bulbs, exposed electric wires, invasion of cockroaches, no glasses on the windows or no windows at all, no water on the washrooms, elevators broken, lot of dirt everywhere. In Cuba you can have a free heart transplant, which I consider to be one of the good things of the system but by the same token you can die of head ache because maybe that week there were no aspirins available.

  7. Follow up post #7 added on June 11, 2009 by publisher with 3905 total posts


    You make too much sense.

    You are obviously an enemy of Cuba wielding all that truth around like that.

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  8. Follow up post #8 added on June 12, 2009 by publisher with 3905 total posts

    This story from the AP about the Cuban government cutting back on food rations is going to help Cuba save money? Really?

    I love this line from :

    “What international crisis? In Cuba we’ve been in crisis for 50 years,” a 28-year-old dentist told AFP wryly, declining to be named. “I’m tired of hearing justifications for the problems we always have.”

    and this…

    ““It got much better for a while but now the ‘guaguas’ (buses) are bad again,” said a young girl studying at a sports college in the east of the capital, declining to be named.

    A positive assessment of the situation could at least be heard on the airwaves, however.

    “Take the bad luck away. We’re sure the bad times won’t come,” rang out the lyrics of a popular reggaeton tune.

    Sweating behind the window of a Havana shop, 44-year-old Yakelin Rodriguez was not so sure.

    Under a new energy savings plan introduced this month, and amid sweltering heat, she can only turn on air conditioning for four hours in the afternoon.

    “I’m about to die in this heat,” Rodriguez said.”


    Grant, back to you. Put a positive spin on this for us please. Thanks.

    Cuba consulting services

  9. Follow up post #9 added on June 12, 2009 by publisher with 3905 total posts

    How about this? Raul is “too busy” to go to St Kitts for a day?

    A “very tight domestic agenda” is keeping Cuban President Raul Castro from attending Friday’s 6th PetroCaribe Summit.

    Cuban Vice President of the Council of State, Esteban Lazo Hernandez officially informed St Kitts and Nevis Prime Minister Denzil Douglas during a courtesy call on Thursday morning that urgent domestic matters will keep President Castro from attending the Summit.

    “The President conveys his personal best wishes and regrets that he is unable to come. He has a very tight domestic agenda which prevented him from coming. I know that he cannot be replaced, but he has sent me in my capacity as the Vice President of the Council of State,” said Hernandez, who was accompanied on the courtesy call by the Vice President of the Council of Ministers, Ricardo Cabrias Ruiz; Cuba’s Ambassador to St Kitts and Nevis, Ana Maria Gonzalez and Director of the Latin American and Caribbean Division of the Ministry of Foreign Affairs, Rogelio Sierra Diaz.


    Raul is too busy to go and talk about oil. Really? One would think that Cuba is having tough time lately.

    (from CUOPM, thanks to CaribbeanNetNews.com for the story)

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  10. Follow up post #10 added on June 12, 2009 by grant

    Really how can one man attend all meetings??? Cuba sells oil for dollars($70/bbl) to Europe. Hot open the windows! Cuba needs to sell more oil to make up for the decrease in nickel sales. Tourism is about the same but the cream of the tourist dollar goes to offshore hotel owners and agencies. Buses dirty?? Typical cuban travellers.

    The closed sugar mills were old and not very energy efficient, cost of production more than sale price per tonne. All workers given other jobs, some sent to schools, all with current salaries.(Like GM right). Milk is available from Canada at subsidized price(as milk powder) and is distributed across Cuba.Gift from Canada. Do not tell Obama!

    Many hospitals have been rebuilt as per orders of Fidel, given several years ago.

  11. Follow up post #11 added on June 12, 2009 by Yeyo with 411 total posts

    Those old sugar mills were very efficient while still in the hands of the legitimate owners, there is no one single efficient sugar mill or factory in Cuba today, you know why?? Very simple answer, Castro and his cronies.

    Most workers were sent home and they have to look for new jobs for themselves, some were given courses but none of them kept their original salaries.  To compare the workers in Cuba with the GM employees is very disrespectful of you, but obviously we already know that from your earlier posts. A GM employee makes in an hour over twice what a Sugar mill worker makes in a month. A recently layoff GM employee makes in a month more than what a Cuban sugar mill worker makes in a year.  You do the math.

    The milk from Canada, some of it donation and most of it bought is used mostly to make the milk that is sold subsidized, now, do you know that the milk in Cuba is only given to kids from 0 to 7 years old? Do you know that once the kids reach 7 years they would never get more milk unless the parents buy it on the hard currency grocery stores where the milk is as expensive as in Canada or more??
    I know that some hospitals has been rebuilt, they better be, however the issue is not how many had been rebuilt but the actual conditions of the majority of the hospitals (and the schools) in Cuba and the present time. Most of them are completely destroyed and in total estate of disrepair. Do you know that when a pregnant woman is ready to give birth, go the hospital and she has to show that she has a light bulb for the room, sheets for the bed, towels, a water bucket, etc. before being admitted?? The only things she not needs to bring are the cockroaches they are there for free.
    Check it out, that is Cuba today.

  12. Follow up post #12 added on June 13, 2009 by HavanAndrew

    The perfect financial storm. However, the Chinese are in there (al least two weeks ago when I was in Cuba last) reviewing the assets they will be buying, especially the mega tourist operations. SolMelia and others will have new partners, not of Cuban heritage. Just a guess at this point, buy up and build, control before American investors are given a chance. Brilliant strategy by Castro Inc. The Castros disgust me but you have to admit they are brilliant strategists.

    On a post note from a different posting regarding SolMelia and its current operating partner. Sol Melia Cuba is a separate arm from SolMelia, co-owned by Sol Melia and Gaviota. Gaviota is the business enterprise held by the military of Cuba and not by the citizens of Cuba. The Cuban military disperses of its profits as it sees fit, in other words Castro Inc funds its military.

  13. Follow up post #13 added on June 13, 2009 by publisher with 3905 total posts


    Thanks for the information. I think China is in Cuba for the nickel and oil not so much for tourism?

    China is locking up the commodities around the world and Cuba is a part of that strategy.

    Cuba consulting services

  14. Follow up post #14 added on June 14, 2009 by Yeyo with 411 total posts

    Fidel and Raul Castro had passed from being revolutionary nationalist fighters to try to keep the power at all cost even if that means giving control of the Cuban resources to foreign corporations.

    The Foreign Investment Law in Cuba says that anybody can invest in Cuba except….think about it…..the Cubans.

    Cubans are now truly second class citizens on their own country, I remember when Castro used to say that one of the reasons of the “revolution” was to return to the Cubans what had been taken by the American corporations, now what, he run out of ideas and is giving away the country in parts to the highest bidders and sometimes not even bidders but just good wealthy friends.

  15. Follow up post #15 added on June 14, 2009 by publisher with 3905 total posts

    The economic situation in Cuba is getting worse. Sounds like a lot of workers are hanging around more than ever due to lack of parts, transportation, pay, motivation, etc etc.

    So, where does it go from here? How long can Cuba just sit around and do nothing?

    And for once, please spare me the Embargo blame for once. Raul has GREAT relationships with dozens and dozens of nations from around the world.

    Cuba’s credit sucks and that is Fidel’s and Raul’s fault, plain and simple.

    Cuba consulting services

  16. Follow up post #16 added on June 15, 2009 by Yeyo with 411 total posts

    More calls to Chavez that is also in trouble.

  17. Follow up post #17 added on June 15, 2009 by grant

    Cubans may have to take some things to hospitals BUT before they could not afford to go and stayed home without medical care.  The population is growing but resources are not….what do you expect from a carribbean nation…they are all in the same boat. Cuban mills before 59 where not efficient unless you mean low costs as they fired the workers after the 4 month zafra was finished. The newest mill in Cuba before 59 was built in 1925. They have now 6 or 7 new mills.The older inefficient mills(most of) have been shutdown. High oil prices have been a killer.  With the new mills built in Brazil and India having productions of 30 million tonnes per year of sugar, Cuba was losing the battle for market share before Castro.

  18. Follow up post #18 added on June 15, 2009 by grant

    GM workers are not being laid off, they are fired with their plants shutdown permanently. Once benefits run out, they are toast. Lose their homes and cars.

  19. Follow up post #19 added on June 15, 2009 by publisher with 3905 total posts



    1. “The population is growing”. No it is not growing.

    2. “what do you expect from a carribbean nation”. Poor old Cuba. Now all Caribbean nations are poor?

    3. “They have now 6 or 7 new mills”. Not true.

    4. “High oil prices have been a killer”. Not true. Fidel started closing down sugar mills YEARS ago before oil prices rose.

    So Grant, cut the shit. We’re tired of the lies. You refuse to back up your assertions of fact even with a Granma article.

    This is your first warning (one you should have had a very long time ago). I will not have a person posting lies and half truths and excuses and propaganda for the failed Cuban government.

    You really can’t believe all that crap you right so you are just trying to cause trouble.

    So, KNOCK IT OFF and contribute to this site like a normal person with facts and opinions but not lies and deception.

    Cuba consulting services

  20. Follow up post #20 added on June 15, 2009 by grant

    Milk provides calcium and is important in small children. There are other sources.!!!!! After 7 not so much. I have two nephews in Cuba 8 and 16 years of age, neither has rickets. Both very healthy! As are all cuban children. My friend Luis Gomez rebuilt the educational system once he became Minister, now even Yoani has published pictures of a healthy and well dressed student body at her son’s school.

    Poor Luis, his new job is quality control in a match factory.

  21. Follow up post #21 added on June 15, 2009 by grant

    Everything I post is the truth. From my experiences working in the Ministry of Industry and the Ministry of Superior Education. I have no axe to grind!!

  22. Follow up post #22 added on June 15, 2009 by publisher with 3905 total posts


    Congratulations. This is your second warning.

    There will be no more warnings. Next comment that is out of line and you are banned.

    I have put up with Varsi and the other idiots (maybe you all along?).

    I have given Communists like you PLENTY of room here but the comments are always the same and enough is enough.

    1. Stay on topic.

    2. Post opinions or refer to outside sources to back up assertions of fact.

    3. Do not post personal attacks.

    Each of these have some leeway but repeated violations will get a user banned.

    Cuba consulting services

  23. Follow up post #23 added on June 15, 2009 by Yeyo with 411 total posts

    Amazing, so now kids do not need milk once the reach the 7 years old age. What about your kids, you also remove the milk from them when they reached 7 years old??
    Your nephews in Cuba likely have black market milk and lots of groceries from the black market and from the hard currency grocery stores; otherwise they would not be healthy.
    I have nothing against your friend the Ex minister but I have to tell you that the Education system in Cuba, is a catastrophe, free Education, free Education, free Education, but what about actual Education, classes are given by TVs at school while the kids sleep or play because the young people prefer to work as a barman or server at a hotel rather than as teachers.
    In Cuba the Teachers were always regarded as a very important part of the society, my grandmother and her sister were teachers on public schools before the “revolution” and I recall people of very poor origins coming to our house later, when they were old, to extend their regards and gratitude because they help them change their life for better.
    You no longer would see that in Cuba, they are growing a generation of kids that want to be foreigners, barmans and gineteras. 
    PD: I also feel sorry for Mr. Gomez. Unfortunately we have seen that once and once again.

  24. Follow up post #24 added on June 16, 2009 by grant

    Now Yeyo you are saying that there is a lack of teachers and this is on topic? I refer to Luis Perez"s book on the cuban economy of 1955 with hundreds of references on the state of this economy(ON BECOMING CUBAN) by state economists, by US State Dept., US Embassy. National Bank, etc. etc. stating that the economy of Cuba was close to bankruptcy with a PIB of $400 compared to the USA of $10,000.Orlando a frequent poster on Yoani Sanchez’s blog was a engineer in azucar and he listed the 6 or 7 new mills in Cuba built since 1970, efficient mills to boot!  Children are still being born in Cuba. The exaggerations of PUB cannot be tolerated and his false propaganda likewise. Saludos revolucionarios Never more!

  25. Follow up post #25 added on June 16, 2009 by publisher with 3905 total posts

    Unlike you Grant, I can back up my statements of fact.

    Population growth in Cuba is negative as of 2006 number according to wikipedia


    Population growth rate   -0.01% (2006 est.)

    2. “Orlando a frequent poster on Yoani Sanchez’s blog was a engineer in azucar and he listed the 6 or 7 new mills in Cuba built since 1970, efficient mills to boot!”

    More lies. I have never seen any Orlando post on Yoani’s blog in English or in Spanish.

    Post one link to a comment by Orlando or you will be banned.


    Enough lies from you Grant.

    This is your very last warning.

    You are making your bosses look bad so you’ll probably be reassigned since you are not a good fake.

    Say hi to Varsi for me.

    Cuba consulting services

  26. Follow up post #26 added on June 16, 2009 by HavanAndrew

    There is a saying in English, “If you throw enough S@#% against the wall, some of the S@#% will stick. At this present moment, so much false S@#% has been propagated by Castro Inc. that reality has been long forgotten. The country of Cuba has been a slut to foreign powers, going from sugar daddy to sugar daddy. Groveling for handouts from Spain, the U.S.A., Soviet Union, Venezuela and now China. Cuba is blessed with so many assets that it should be an island power. Natural resources, human resources and artistic resources. Grow up Cuba and get rid of your ridiculous system, rise up and then you won’t have to resort to absurd bullS@#%.

  27. Follow up post #27 added on June 16, 2009 by publisher with 3905 total posts

    Well said.

    If Grant and those like him would use their time and talents for truth, Cuba would be a major force in Latin America.

    Cuba consulting services

  28. Follow up post #28 added on June 17, 2009 by Yeyo with 411 total posts

    It does not matter how many new mills had been built from the 60’s, there is nothing productive in Cuba, even when they have among the lowest paid work force in the world, still the productivity is extremely low in every single sector of the economy. Hundreds or maybe thousands of new factories were bought during the last 50 years with credits that helped grow the Cuba’s dept, many of those factories were never built, many never reached full capacity and hundreds were closed within a short period of time. The reason is one that has been proven many times, governments are not good administrators, but the socialist governments are even worse administrators.

    Do not bul…... us more with this or that book written from this or that guy, all like you brainwashed with nice treats during trips to Cuba. That’s the Castro I know excellent with foreigners that can serve him well in the future but a Dictator to all Cubans. While you were nicely treated in nice Mercedes and good hotels there were Cubans working in the sugar mills without shoes, yes without shoes still today, amazing hah!! Even I did not believe it until I saw it with my own eyes.

  29. Follow up post #29 added on June 18, 2009 by publisher with 3905 total posts

    From Cuba Trade and Investment News:

    Meanwhile, hundreds of millions of dollars worth of hard currency bank deposits of hundreds of foreign businesses — most of them at state bank Banco Financiero Internacional — remain blocked.

    Foreign suppliers of consumer and intermediate goods are rejecting new orders while they can’t access their funds. This, the foreign source says, is causing a “chain reaction.”

    “I know of [Cuban] companies that are paralyzed due to the lack of supplies and spare parts,” the foreigner said.

    Cuba consulting services

  30. Follow up post #30 added on June 22, 2009 by pipefitter with 275 total posts

    Pub, Cuban population shows 11177743 for 2002 and 11236000 for 2008, in Wikipedia 2009.

  31. Follow up post #31 added on June 23, 2009 by Cubana with 282 total posts

    Cuban population to decrease by 2025

    HAVANA, Cuba (ACN)—Studies on the Cuban population carried out late 2008 yielded that there will be 100,000 less citizens in the country by 2025. The research led by Cuban experts showed that population growth in the Caribbean archipelago is undergoing a period of stagnation that will give way to a decline, mainly as a result of aging and decrease in births.

    Thus, from 2008 to 2025 the number of inhabitants will fall by a little more than 100,000 people, while experts predict that the Cuban population will be below 11 millions by 2032, reported Granma newspaper.

    See rest of story here:


  32. Follow up post #32 added on June 23, 2009 by pipefitter with 275 total posts

    Pub was talking 2006 Cubanita.

  33. Follow up post #33 added on June 23, 2009 by Yeyo with 411 total posts

    It does not matter when, the fact and the matter is that more and more people are thinking about how to leave the Island and less and less people are thinking about creating a family there, as simple as that.

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