Wealthy creditors give Cuba a pass, but will impose penalties

HAVANA, ( Reuters) - Wealthy nations grouped together in the Paris Club of creditors have waived Cuba’s annual payment for restructured debt but plan to impose a penalty on the Communist– run island, according to five Western diplomats with knowledge of the situation.

This year marks the first time Cuba has missed the entire payment due by Oct. 31 since the restructuring agreement was signed in 2015, though it fell short of full payment last year as well.

The accord, signed in tandem with the U. S. detente under former President Barack Obama, is seen as a historic effort by all parties to begin to bring Cuba back into the international financial system and has survived efforts by the administration of President Donald Trump to torpedo it.

Cuba had asked earlier this year for a two-year moratorium and the waiving of penalties for overdue payments due to the coronavirus pandemic.

The Caribbean nation’s tourism sector was closed most of the year, export earnings declined, and fierce new U.S. sanctions are making matters worse for an economy already notorious for inefficiencies and currently suffering shortages of food, medicine and other basic goods.

The United Nations forecasts growth will decline 8% this year after averaging a 1% increase since 2016.

“We are united in our belief that the agreement should be saved and think the Cubans agree. That is why we waived payment, but not the penalties,” one diplomat said. Like others, he requested anonymity as he was not authorized to discuss the matter publicly.