WASHINGTON, DC – A few years ago, it would have been difficult to imagine Cuba knocking at the doors of the World Bank and the International Monetary Fund. Now, with the United States having just restored diplomatic ties with the island after more than a half-century of enmity, it seems to be only a matter of time before it joins both institutions – to the benefit of all involved.
Membership in the IMF is a precondition for joining the World Bank, and the advantages that Cuba could gain from membership in the latter are easy to see. Cuba is rightly proud of its social achievements, but ensuring that they remain sustainable will require that its economy continues to grow. For that, Cuba will need to pursue and deepen the economic reforms that it has started, address its technological obsolescence, and upgrade its public infrastructure.
All of this requires raising capital. And, though Cuba could (and possibly should) seek financial support from sources other than the World Bank, there are problems with many of the multilateral alternatives. The Andean Development Corporation’s financial support could be limited. The procedures for accession to the BRICS countries’ New Development Bank are not yet established. And joining the Inter-American Development Bank could be politically sensitive, given its link to the Organization of American States.
Cuba could of course borrow from bilateral creditors. But state-to-state loans usually include conditions that are less transparent than those attached to funds from rules-based international financial institutions. Moreover, none of these other potential sources of financing would match the World Bank’s technical support.