Brazil's government will pay about 23 million reais, equivalent to about $6 million, in the coming days to cover a default on a loan state-run development bank Banco Nacional de Desenvolvimento Econômico e Social granted to Cuba, Folha de S.Paulo reported.
Cuba repaid BNDES about $4 million out of a total $10 million in debt that was due in June. The bank formally recognized the loan as nonperforming 180 days after the due date, triggering coverage from a guarantee fund that is backed by Brazil's Treasury, according to the report.
Most of the debt relates to funding Brazil started granting in 2009 to develop the Port of Mariel in Cuba. BNDES loaned $682 million for the project, which was reportedly completed in January 2014.
The repayment schedule for the total loan amount extends until 2034, but Cuba has started defaulting on payments amid alleged financial difficulties, Folha reported. Venezuela, a key ally of the island nation, is struggling with its own economic and political crises.
At the end of September, Cuba was behind on $26 million worth of debt repayments to BNDES, while another $70 million will be due in 2019.
According to the report, Cuba has also started falling behind on approximately €45 million of debt payments due to Banco do Brasil SA, which is also state-run, for the financing of food exports.
As of Dec. 20, US$1 was equivalent to about 3.85 Brazilian reais.