Cuba wants to pay off $270 million debt in rum

LONDON (CNNMoney) — Cuba wants to pay off its Soviet-era debt in rum.

The cash-strapped island nation has offered to pay back $270 million in debt to the Czech Republic using rum and pharmaceuticals instead of money.

The Czech finance ministry said negotiations over how the old debt will be paid are still in the “early stages,” and stressed that it would like at least part of the debt to be paid in cash.

“The Cuban side has offered a list of commodities, including medications and several brands of rum, to settle part of the debt,” said ministry spokeswoman Katerina Vaidisova.

The Czech Republic imported $17 million worth of rum in 2015. If Cuba’s full debt was settled with the spirit, the supply would last the country an estimated 15 years.

Vaidisova said the two parties were still debating exactly how much Cuba owes. That’s because most of the debt is counted in Soviet rubles and must be converted into an existing currency.

It’s also not clear exactly what the Czech government would do with the rum. Most pharmaceuticals can not be used as payment because of stringent European Union regulations.

Cuban officials were not immediately available to comment.

Communist countries often used commodities as a form of payment during the Soviet era. Cuba regularly exchanged its sugar for Soviet fuel, for example.

Cuba accumulated huge external debts during the Cold War. It defaulted on much of it in the 1980s.

The U.S. reestablished formal diplomatic relations with Cuba last year, but the country is still cut off of most international financing. It’s also excluded from the IMF and the World Bank, having withdrawn from the organizations in the 1960s.

It will have to settle its debts — or at least reach an agreement on them — before being readmitted into the institutions.

The Paris Club, an informal group of rich creditor countries, said last year that Cuba owed its members more than $11 billion.

Several members of the club, including the U.K., Australia, Canada and France, agreed last year to restructure portions of their Cuban debt and wave some payments. In exchange, Cuba agreed to pay them $2.6 billion over the next 18 years.

Russia has written off 90%, or $32 billion, of Cuba’s debt.

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