FX.co ★ Russia waves Cuba’s debt

Russia is really generous! The country has already showed its liberal approach providing humanitarian, political, and sometimes military assistance of different level to everyone in need. This time, Russia is going to help financially. Having considered the current situation and real prospects, the government decided to forgive a $29 billion debt to one of its debtors. The sum is impressive even nowadays – bank collectors do not leave those deep in debt alone even for smaller sums, whereas, in this case a multi-billion debt is quietly written off. Luckily for the Island of Freedom, it will end up owing just a small share to the defunct USSR. Thus, Cuba and Russia initialed talks related to Cuba’s outstanding bills of the Soviet Union loans. Totally, the debt equals $32 billion. Under the deal, 90% of Cuba’s debt will be forgiven. In addition, $3 billion debt is to be settled over 10 years. The agreement was sealed this spring. Back then, Russian Prime Minister Dmitry Medvedev signed a draft bill on debt restructuring with Cuba. Prior to that, in 2008 Russia wrote off Iraq and Afghanistan debts - $13 and $12 billion respectively. However, Havana is said to hold the largest Soviet-era debt. The reasons behind such decision are not known. Perhaps, Moscow understands that it will not be able to get the money back. It turns out that the country aims to save face – it is better to write off the debt rather than not to get back it. On the flip side, Russian oil companies are drilling into Cuba’s offshore oil deposits, in such a way the debt agreement may be mutually beneficial.