Cuba Business

Cuban debt to Russia - Follow the funny money trail

Posted July 19, 2006 by publisher in Cuba Business.

After nearly a decade of urging Cuba to pay off $22-billion debt to the former Soviet Union, Russia shelves the issue for indefinite time, Deputy Finance Minister Sergey Storchak made clear. Instead, PM Mikhail Fradkov will offer a new loan of $350 million during his visit to Cuba.
In time of September tour to Cuba, Russia’s PM Mikhail Fradkov will suggest restructuring Cuba’s debt to Russia and to the former Soviet Union, fix the settlement schedule for the debt to Russia and offer a new loan worth $350 million, according to Storchak.

Cuba’s debt to the USSR is around $22 billion, the deputy finance minister said, other estimate vary from from $16 billion to $25 billion. In Cuba, however, they don’t think they owe anything to the USSR. To the contrary, Fidel Castro vowed some time ago Cuba may claim damages of $30 billion due to the abrupt break of relations.

But the debt of Cuba to Russia is of no dispute. It amounted to $161.123 million as of late 2005 (with regard to arrears) and amassed when Russia was funding completing construction of Huragua nuclear plant there. Cuba services neither this debt nor the debt to the former USSR.

The issue of Soviet debt settlement won’t be raised at all during Fradkov’s tour, according to Storchak. “Russia has no desire to abandon the assets but may wait till the time when the debt is being discussed without continuous references to Soviet-Cuban friendship,” explained representatives of Finance Ministry.

Moreover, in an effort to revive the mutual trade, Fradkov will offer to Cuba a new tied loan of up to $350 million, which the latter should spend to pay for deliveries of Russian machinery and power equipment.

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