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CUBA
Economy stalled
Daniel Vásquez
1/29/2004
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Cuban economy continues in difficulties, unable to develop and satisfy long-standing needs.

Although the Cuban economy grew 2.6 percent in 2003, an improvement over 1.1 percent growth the previous year, the expansion is vastly insufficient to satisfy the needs of the population.

“Food prices are very high, excessive for the salaries of the population,” said Mario Gutiérrez, a 55-year-old Havana resident. “The state guarantees a meager basket of foodstuffs monthly that includes six pounds of rice, a pound (0.45 kg) of beans, six pounds of sugar, some salt, half a pound of oil, eight eggs and a pound of chicken for each person.”

The rest of the products, Gutiérrez said, must be bought in dollars at stores in which they cost two to four times more than in other Latin American countries. The average salary ranges between 200 and 250 pesos a month (the official exchange rate is 1 peso to the dollar and 26 pesos to the dollar in state-owned money exchange offices).

“Salaries are miserable, prices rise, the state guarantees less and less, the cities are in ruins, bureaucracy is worse and the press does not reflect the real situation of the population,” said 60-year-old Alicia Gómez.

Many Cubans question the optimism in the official press, since they subsist with help from relatives abroad, informal tourism services and a clandestine network of markets and services.

“I have a son who left the country five years ago,” said Gómez. “Thanks to him, I have a little money every month to eat.”

The remittances from abroad, considered by some experts to be the biggest contributor of net income for the country, reached US$915 million in 2003 — according to the Economic Commission on Latin America and the Caribbean (ECLAC), although other sources estimate $1.2 billion, slightly higher than in 2002, when they were $1.1 billion.

Cuban authorities attribute growth of Growth Domestic Product (GDP) in 2003 to higher extraction of oil and gas, robust nickel prices and moderate recovery in tourism.

Energy was the most dynamic sector of the economy last year, with output that exceeded 4 million tonnes of oil and more than 700 million cubic meters of gas (equivalent to 4.3 million tonnes of oil). Electricity generation grew 2.1 percent compared with 2002, with domestic crude oil covering 83.4 percent of this activity.

Nevertheless, Venezuela supplies 45 percent of the oil for the rest of Cuba’s needs, selling Cuba 53,000 barrels a day. Cuba imports between 5.5 million and 6 million tonnes of oil annually, comprising 20 percent of Cuba’s imports.

The production of nickel — the second largest export product — last year was 4.7 percent lower than in 2002, but income was higher thanks to the increase in international prices for the metal, which ranged between $11,000 and $13,000 a tonne.

Last year, tourism recovered with 12.7 percent more visitors arriving in the country than in 2002, when Cuba received 1.6 million tourists. It is estimated that 1.9 million tourists visited Cuba in 2003, mostly from Canada and Germany.

Cuba’s total income from tourism in 2003 was expected to have reached $1.9 billion, after totaling $1.7 billion in 2002 — a level similar to 1998.

ECLAC reported that higher economic growth in 2003 was due to the remittances sent from by Cubans who reside abroad, to exports which grew 14.1 percent and to repairs from damage caused by three hurricanes which hit the island nation in the previous two years.

ECLAC said that there was limited capacity to manage economic policy due to the relative scarcity of hard currency caused by the stagnation in the flow of direct foreign investment, an increase in service on the foreign debt calculated in $11 billion, the acquisition in cash of foodstuffs and agricultural products from the United States — around $230 millions in 2003 (LP, Aug. 27, 2003) — and the deterioration in the terms of exchange.

This bleak scenario was compounded by the poorest sugar harvest in nearly seven decades (LP, Feb. 12, 2003). Sugar production — the main export product — fell from 3.6 million tonnes in the 2001-2002 to 2.2 million tonnes in the 2002-2003 harvest, which implied a reduction in the production of food for animals derived from sugar cane and lower production of drinks, liquors, paper and artificial wood.

Cuba even imported sugar from Colombia and Brazil to cover its demand in the domestic market and used almost all of the national output to cover breach of contracts.

Juan Triana, director of the Center of Studies of the Cuban Economy at the University of Havana, said tourism, the internal market for hard currency and direct foreign investment “are exhausted and require new operating conditions.”

In a bid to improve the system’s general efficiency, increase demand, employment and workers’ income, Triana proposed promoting the cooperative sector in services and productive sectors complementary to the state industrial sector.

One of the biggest boosts to GDP growth was the increase in state spending for social construction, housing repair, schools, pharmacies, medical offices and the solution of some social problems that could not be postponed any longer.

The Minister of Economy and Planning, José Luis Rodríguez, said that the Cuban government will continue applying the principles of equity and social justice but he warned that the outlook for 2004 is not too bright given the high prices of oil and food as well as the fall in sugar prices.


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In 2003, 1.9 million tourists visited the island nation. (Photo. GRANMA)
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