http://havanajournal.com/business/entry/state-of-cuban-economy-not-so-good/

HavanaJournal.com: Cuba Business

State of Cuban economy - not so good

Posted July 22, 2009 by publisher in Cuba Business.
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By Marc Frank | Reuters

Cuba is cutting estimates of imports by billions of dollars this year and projecting a decline in export revenues due to the international financial crisis, according to a government report shown to Reuters this week.

The Economy and Planning Ministry forecast was drawn up within two months of President Raul Castro’s replacement in March of Cuba’s entire economic leadership team after a dismal 2008 performance.

The report outlines adjustments to the 2009 plans of the old cabinet, including projections of 2.5 percent economic growth compared with the original 6 percent.

The report says imports will plummet 22.2 percent, or some $3.4 billion, compared with an increase of nearly $1 billion first projected. Exports will decline by $500 million, compared with an increase of $600 million the old cabinet forecast.

“I think the figures are much more realistic and indicate they are trying to get the current account back in the black,” a foreign businessman said, asking his name not be used.

The current account is a broad gauge of the balance of foreign exchange flowing in and out of a country, in Cuba’s case critical given the Caribbean island’s dependence on imports.

The government has implemented energy savings measures, cut social spending and adopted other measures in recent months to cope with a growing liquidity crunch.

At the same time creditors have been asked to restructure debts, and the bank accounts of hundreds of suppliers and other foreign companies have been blocked in state-run banks since January.

The report coincides with a video of a cabinet meeting, apparently in May, making the rounds of state managers.

Economy and Planning Minister Marino Murillo Jorge announced at the meeting that the country was short 30 percent of the resources needed to meet the 6 percent growth figure, a source familiar with the video said.

Local analysts said Communist-run Cuba had not faced such a dire situation since the early 1990s when the fall of the Soviet Union forced a 75 percent cut in spending.

They said growth would be less than 2.5 percent and could be negative this year.

Cuba’s trade deficit soared by 65 percent in 2008, driven by a doubling in the value of oil imports, higher costs of food imports, a decline in prices for key export nickel and destruction caused by three hurricanes.

Exports totaled $4 billion, similar to 2007, while imports increased 41 percent to $15.4 billion, leaving a deficit of $11.4 billion, the National Statistics Office reported on its web page http://www.one.cu.

Member Comments

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On July 22, 2009, publisher wrote:

Can the Cuban people suffer anymore under the Castro regime?

Yes, probably.

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On July 22, 2009, HavanAndrew wrote:

This all looks like a new convenient excuse. Even the most dedicated communist Fidelistos don’t want to hear the U.S. embargo excuse anymore. It will now be the whole world and the woes of capitalist societies to blame. It won’t be the Cuban system’s fault at all. Things are going to get really bad in Cuba, the 22% decline in imports will be no doubt be of the essential nature.