Cuban Debt Settlement on Track

The agreement reached by two Iranian state-owned financial entities and a Cuban bank last year to restructure the Caribbean island’s debt has borne fruit, with Iran having received €6 million of its money so far.

Last September, President Hassan Rouhani had travelled to Cuba at the head of a delegation, during which an agreement was signed by the Export Guarantee Fund of Iran, Export Development Bank of Iran and Banco Exterior de Cuba to settle that country’s debts dating back to 2012.

Arash Shahraini, EGFI’s deputy chief, had told Financial Tribune at the time that Havana had agreed to clear its entire debts–now known to be about €50 million–by 2019, after meetings between officials from the Central Bank of Cuba and Banco Exterior de Cuba.

Now, according to the official news website of EGFI, Shahraini has again travelled to Cuba to follow up on the issue and reported that in spite of all the difficulties, “fortunately the issue of restructuring Cuban debts has yielded results and after constant negotiations with the Cuban government and central bank and with the support of the Foreign Ministry, the Cuban side has cleared €6 million of its debts”.

As Shahraini had mentioned earlier, EDBI provided a €200 million credit in 2006-8 for Cuba to import goods and services from Iran, €80 million of which were used. EGFI also agreed to cover the repayment of the money, as it was backed by the Cuban government’s sovereign guarantee.

Iranian exporters received their money on time, but the Cubans failed to meet their commitments of repaying the credit within two years due to financial difficulties. However, by 2012, “Cuba had cleared a portion of its debt to Iran, but the tightening sanctions against Iran disrupted the process”.

The €50 million that Cuba owed at the time was the remaining €43 million plus interest.

According to Shahraini, “as part of the agreement signed last year, it was established that the Cuban side would pay a monthly figure of  €1 million in 2017 and about €2 million in 2018”, a commitment that they have so far adhered to.

The official also announced that a complementary agreement was reached last week by EGFI, EDBI and BEC in Havana, based on which any remaining issues concerning the original amount of debts and its interest was resolved and an official document was signed.

Shahraini hoped that with the constructive collaboration formed between the Iranian exim bank and the state-owned export credit agency, the rest of the foreign debts of these two entities will be recovered soon.

He added that if the Cuban side continues to adhere to its commitments, “the matter of the new export credits will be reviewed next year”.

As the EGFI deputy chief had mentioned last year, Cuba is keen to receive another credit line from Iran, “which will be discussed after the existing issues are resolved”.

In conclusion, Shahraini referred to reactivating credit lines for buyers from countries that import Iranian goods and services as one of the important priorities of EGFI and EDBI.