Cuba’s $32Billion debt erased by Russia

Russia writes off 90% of Cuba’s debt ahead of Putin’s ‘big tour’ to L. America (Source RT)Russia has written down $32 billion of Cuba’s Soviet era debt. Russian President Vladimir Putin signed the law ahead of his official visit to Latin America, with Havana as his first stop. The agreement was first signed in October 2013 and draws a line under a twenty-year dispute. Cuba is now required to pay back $3.2 billion over the next 10 years. The first payment from Cuba is expected in October, and the money will be transferred to an account of the Russian Bank opened at the National Bank of Cuba. The agreement was signed into a law on Friday ahead of Russian President Vladimir Putin’s official visit to Latin America, where Cuba comes the first.

Cash-strapped Cuba has been feverishly trying to restructure its debt to jump start its economy and attract investment. Three years ago it restructured $6 billion it owes to China, and in 2012 Japan forgave about $1.4 billion. Mexico recently forgave $478 million of Cuban debt, and Havana agreed to pay back $146 million over 10 years. Cuba’s total debt was officially estimated at $13.6 billion in 2012 which is described s “active”. Other debt collected prior to its default in 1980s is referred to as “passive”. Cuba remains a strong ally of Russia, with trade between the two countries at about $200 million last year. After the Soviet Union broke up Russia became the legal successor to Cuba’s loans. Cuba in turn rejected this, saying that the debt was in a currency that no longer existed, and was to a country that had vanished.

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