ANNOUNCEMENT 17 Oct 2015

In October 2015, the government of the Russian Federation announced a change in its trade finance instruments.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising
Inception date: 17 Oct 2015 | Removal date: open ended
Still in force

Trade finance

The governments of Cuba and Russia strengthened bilateral trade ties through a new export credit programme in 2015.
 
With three related resolutions, the Government of the Russian Federation approved the future extension of an export creditto the Government of the Republic of Cuba related to the construction of power units at the thermal power plants " Máximo Gómez " and "Eastern Havana" in Cuba.
 

  • Resolution No. 2071-p approved the draft agreement between the Government of the Russian Federation and the Government of the Republic of Cuba on the construction of power units at thermal power plants " Máximo Gómez " and "Eastern Havana". As written in the draft agreement, it authorises the responsible state bodies of the Russian Federation to sign on behalf of the Russian Federation, upon reaching of consensus as part of inter-state negotiations, the final agreement ('Agreement') with potential amendments that do not change Agreement's principal content. The resolution stipulates that each of the power units at the thermal power plants " Máximo Gómez " and "Eastern Havana" in Cuba is to be with capacity of 200 MBt.

 

  • Resolution No. 2075-p contains the parameters of the export creditthe Russian Government will issue in favour of the Government of the Republic of Cuba. The export credit's amount is up to a total amount of 1.2 billion EUR. The purpose of the Russian state credit is to finance up to 90% of the value of each contract for supplies of goods, services and works, executed by the Russian and Cuban organisations, involved in the Agreement. The advance payments related to the export credit are at the amount of 10% of each contract. They are denominated in EUR and paid by Cuba in favour of the Russian organisations, involved in the Agreement. The export credit is to be utilised in the period 2016-2024. In 2016 the utilised credit amount must not surpass 30 million EUR. The credit's maturity is 10 years. Its final repayment date is 1 February 2025. Cuba pays an interest rate of 4.5% per annum, calculated at a base 365/360. This interest rate is lower than the lending rate in Russia at the amount of 11.1% in 2014 (Source: http://data.worldbank.org/indicator/FR.INR.LEND). According to the definition of the provided WB source, "(t)he lending interest rate is the bank rate that usually meets the short- and medium-term financing needs of the private sector". This interest rate comparison will orientate the reader about the beneficial conditions of the export credit Cuba will obtain. The limitation of this comparison consists in the fact that the lending interest rates for the private sector are normally higher than in the case of state loans. This fact is explained by the lower risk profile of state borrowers in comparison to borrowers from the private sector.

 

  • Resolution No. 2083-p contains further technical details related to the Agreement such as fuel inter-state supplies.

 
The official documents do not contain information regarding the concrete affected HS codes. Therefore, the GTA has implemented the HS codes which normally could be expected to be affected.
The trading partners are identified on the basis of the most recent data from 2006 UN COMTRADE provides with regard to the exporters to Cuba concerning these tariff lines.

AFFECTED SECTORS