* Many foreign business bank accounts still frozen
* Payments to some joint venture partners behind schedule
* Cuba providing little data on key economic indicators
By Marc Frank
HAVANA, June 23 (Reuters) - Many of Cuba’s foreign business partners still have money stuck in state-run banks and do not know when they will get it, 18 months after the accounts were frozen by the cash-strapped Cuban government.
The issue is one of several pressing financial problems that are straining Cuba’s business ties, in a climate darkened by the government’s unwillingness to disclose key information about its economic condition.
Hit by the international financial crisis, U.S. scrutiny of its finances, damaging hurricanes and chronic inefficiencies, the Communist-run nation failed to make some debt payments on schedule beginning in 2008, then froze up to $1 billion in the accounts of 600 foreign suppliers by the start of 2009.
It also delayed payments to some joint venture partners and did not honor some commercial paper that came due thereafter.
State-run banks have offered to pay back the frozen accounts at 2 percent annual interest over five years, but sources said progress has been slow.
“From what I can gather they have yet to make good on some 50 percent of the frozen funds,” said a European commercial attache, whose estimate was backed by other diplomats and business sources, all of whom asked not to be identified.
The pay-back offer does not apply to Cuba’s joint venture partners and foreign companies administering hotels, each of whom are said to be trying to work out their own arrangements to recover funds.
“Everybody I know working on the ground here has around 10 months outstanding payments due, ranging from a million dollars to $50 million,” said the foreign administrator of a Cuban hotel.
Foreign joint ventures in Cuba range from nickel production and rum and cigar distribution to beer, bottled water and hotels.
Cuba is not a member of the International Monetary Fund, World Bank or other multilateral organization it could turn to for support, but its problems are to some degree self-inflicted, according to Pavel Vidal, a monetary specialist at the University of Havana’s Center for the Study of the Cuban Economy.
In a paper delivered last week at a conference hosted by the Catholic Church, he said a lack of regulation and transparency had led to Cuba printing more of the convertible pesos it uses for international transactions than it had reserves to back them.
“Cuban banks have been affected by an excess emission of the convertible peso well above the amount of foreign exchange available for the payments system to function as it should,” he said.
The result was that “Cuban banks find themselves in a systemic liquidity crisis, from which they still have not been able to completely emerge,” Vidal said.
Aware of the crisis, President Raul Castro replaced his economic cabinet in early 2009 and declared the country could not spend more than it earned.
In December, Economy Minister Marino Murillo told the National Assembly the government had stopped the hemorrhaging of foreign exchange and turned 2008’s foreign exchange deficit into a surplus by cutting imports 37.4 percent.
Foreign businessmen said the country appeared to be reducing imports further this year and that most new business was being paid more or less on time.
But they say they cannot get a complete picture of the Cuban economy because the government keeps a tight lid on key indicators such as the amount of its reserves, debt and the current account of the inflow and outflow of foreign exchange.
The Central Bank used to send a yearly review of the country’s economy and finances to creditors, but the report last came out in 2008, covering 2007.
Cuba blames Washington for its lack of transparency, saying the U.S. scrutiny of Cuba’s economic activity as part of enforcement of its longstanding trade embargo leave it no choice but to cover its tracks.
But foreign businesses say the secrecy gives Cuba the upper hand in their dealings, and leaves them in the dark about how much money the island has and where it will be spent.
While they think Cuba’s finances are improving, they are not optimistic that means money will be coming their way soon.
“We think they will have a surplus this year of anywhere from $1.5 billion to $2 billion, but it will go to replenish reserves and prepare for the next hurricane,” said a foreigner involved in financial services.
Editing by Jeff Franks and Frances Kerry