Is It Possible For Cuba To Pay Off Their International Debt With Rum?
By Ryan Velez
CelebrityNetWorth is reporting on a unique measure a country is using to try and pay back its international debts. According to the finance ministry in Prague in the Czech Republic, Cuba is offering a combination of rum and pharmaceuticals to try and pay off its debt. Much of this stems from the 1980s, where Cuba and then-Czechoslovakia were among each other’s 10 largest trading partners. At the moment, a report by Agence France-Presse places the debt at $270 million.
Part of the reason why this option has been presented is due to the nature of Cuban currency. This is split between Cuban pesos for locals and convertible pesos, equivalent to U.S. dollars, which are used by tourists. Neither is available outside of Cuba. In addition, the original debt is in Russian rubles and will need to be converted into modern currency for a final estimation of exactly how much is truly owed. The Czech Republic imported $17 million worth of rum in 2015, and if the full debt was to be settled in rum, it would be enough to last the country for 15 years.
However, this deal is not likely a possibility. Prague mentioned that it would prefer to have at least a portion of the debt repaid in cash. While the U.S. and Cuba recently reopened formal diplomatic relations, Cuba is still cut off from most international financing. In addition, pharmaceuticals may not be a viable option. Cuban drugs lack certification in the EU, but more traditional medicine used in the Czech Republic may be suitable.
While the notion of trying to pay a debt in rum may sound a bit absurd, this doesn’t make it the first time that borrowers in need have proposed swaps. In 2010, the Financial Times reports that North Korea tried to settle 5% of its $10 million in debt with ginseng. This also dates back to the Cold War era, where Czechoslovakia supplied equipment to the countries. The ginseng deal would end up being rejected when Czech officials said they wanted zinc instead. Russia also once offered a nuclear submarine and two fighter jets to New Zealand for dairy products in 1993, and the Dominican Republic agreed to send black beans, pasta, and sugar for Venezuelan crude shipments.