South Africa cancels Cuban debt, offers new credit

HAVANA (Reuters) - South Africa on Tuesday cancelled approximately $137 million in debt owed by Cuba and offered $30 million in fresh credits in hopes of reviving trade with the Communist-run Caribbean island.

The debt cancellation was signed on Tuesday during a three-day visit to Cuba by South African President Jacob Zuma.

"Essentially we are starting from scratch and we are hoping this will be a stepping stone to better things," South African trade ministry official Pumla Ncapayi told Reuters.

Trade between the two countries has been practically nonexistent for years because of the debt issue, while South Africa does pay an unknown amount for Cuban doctors working in the country and has a joint project to produce vaccines.

Cuba last reported its foreign debt as $17.8 billion in 2007 and is currently going through a financial crisis that has left it hard pressed to obtain credits and meet obligations.

Zuma arrived at the head of a delegation that included some 50 representatives from various businesses interested in investing and trading with Cuba.

The official Cuban media reported the sectors included mining, energy, tourism and biotechnology.

"We took the strategic decision to cancel this debt. It is a step towards reinvigorating our commercial relations with Cuba," Trade Minister Robert Davies told reporters in Havana.

Ncapayi said her country hoped to export agricultural machinery and supplies to Cuba as President Raul Castro tries to develop the sector and reduce food imports.

(Additional reporting by Nelson Acosta; Editing by James Dalgleish)