Cuba finds itself in a precarious financial position as it owes Brazil a staggering $676 million, primarily stemming from loans provided by Brazil's National Bank for Economic and Social Development (BNDES) for the development of the Mariel Port. The Brazilian Ministry of Finance has confirmed that there is currently no plan in place to resolve these outstanding payments.
The issue has gained renewed attention following the passage of Law 15.359/2026 in Brazil, which reinstates BNDES funding for the export of engineering services but explicitly prohibits new deals with countries that are in default. This effectively disqualifies Cuba from receiving any new Brazilian credit.
The Mariel Port project was carried out by the Brazilian company Odebrecht in collaboration with GAESA, a conglomerate managed by the Cuban military, under a cooperation agreement signed in 2008 during Lula da Silva's first term as president.
Contracts related to this project, signed between 2009 and 2013, amounted to $641 million, with the total project cost estimated to range between $682 million and $800 million.
Controversial Loan Guarantees and Contract Irregularities
The BNDES accepted guarantees for the loan that relied on revenue from the Cuban cigar industry, which Brazil's Federal Court of Accounts later deemed "weak" and insufficient for the scale of the operation.
The same court uncovered irregularities in the contracts, including excessive interest discounts totaling $68.4 million and extensions of payment terms to 25 years, even though the legal limit was 10 years. These terms resulted in additional financial benefits for Cuba at the expense of Brazilian taxpayers.
Cuba started missing payments in May 2018, leading to $17.3 million in overdue installments by September of that year. Despite Cuba's commitment in October 2018 to settle its debt, part of it went into default just two months later.
Optimism vs. Reality: The Brazilian Stance
When Cuba ceased payments, BNDES activated the Export Guarantee Fund, shifting the financial burden onto Brazilian citizens. In February 2023, President Lula expressed hope that the countries indebted to Brazil would repay their obligations, citing friendly relations. However, three years later, his own Ministry of Finance contradicts this optimism, confirming the absence of any concrete plan for debt regulation as interest continues to accrue on the overdue amounts.
Tony Volpon, a CNN Money columnist, remarked, "It's unwise to invest in nations that lack the ability to repay these loans."
The Cuban government's dire financial state makes future repayments nearly impossible. The island's GDP has contracted by 15% over the last five years, with a fiscal deficit exceeding 11% of GDP and a total external debt projected to reach $28.7 billion by the end of 2024.
The Paradox of Cuba-Brazil Relations
In a striking contrast, while Brazil struggles to recover the $676 million owed by Cuba, President Lula's administration has announced the shipment of over 20,000 tons of food to Cuba as humanitarian aid and defended the Cuban regime at the UN Security Council in April.
However, Cuba is not alone in its default status. Venezuela owes Brazil over $1.2 billion for projects such as the Caracas and Los Teques metro systems and the National Steelworks, bringing the total debt of these two authoritarian regimes to more than $1.8 billion, with no realistic prospect of repayment.
Understanding the Financial Implications of Cuba's Debt to Brazil
Why can't Cuba access new loans from Brazil?
Due to its unresolved $676 million debt and the new Brazilian law prohibiting loans to defaulting countries, Cuba is ineligible for additional financial assistance from Brazil.
What was the purpose of the BNDES loan to Cuba?
The BNDES loan was intended to finance the construction of the Mariel Port in Cuba, a project carried out by Odebrecht in partnership with Cuba's military-controlled conglomerate, GAESA.
How has Cuba's economic situation affected its debt repayment?
Cuba's economic challenges, including a substantial GDP contraction and high fiscal deficit, have severely hampered its ability to meet debt obligations.
What are the broader implications for Brazil with these debts?
The inability of countries like Cuba and Venezuela to repay debts has transferred financial burdens to Brazilian taxpayers and limits Brazil's capacity to finance new international projects.