'Reality' bites: Cuba plans more austerity as finances worsen

[El Presidente]

WORLD NEWS

DECEMBER 28, 2018 / 11:14 PM / 13 DAYS AGO

https://www.reuters.com/article/us-cuba-economy/reality-bites-cuba-plans-more-austerity-as-finances-worsen-idUSKCN1OR0VN'Reality' bites_ Cuba plans more austerity as finances worsen _ Reuters.html

'Reality' bites: Cuba plans more austerity as finances worsen

 

Marc Frank

HAVANA (Reuters) - Cash-strapped Cuba plans fresh austerity measures and will pressure the sluggish bureaucracy to tighten its belt and cut red tape to address weak growth, falling export earnings and rising debt.

 

FILE PHOTO: Self-employed Valentin Traba, 45, sells fruits on the street in downtown Havana, Cuba, December 6, 2018. REUTERS/Stringer/File Photo

 

The economy has averaged 1 percent annual growth over the last three years, compared with a 5 percent to 7 percent rate economists say is needed to recover fully from a 1990s depression caused by the fall of its former benefactor, the Soviet Union.

 

The communist-run country has more recently been hit by the economic collapse of its new sponsor and strategic ally, Venezuela, which began to send fuel and cash its way in exchange for doctors and medicine 18 years ago.Other external shocks, such as Hurricane Irma in late 2017 and the Trump administration’s tightening of U.S. sanctions, have also weighed on the Caribbean island nation’s economy.“The 2019 plan is one of adjustment to current realities. We cannot spend more than we earn,” Economy Minister Alejandro Gil Fernandez said at a session of the National Assembly last week.

State-run companies account for and control most economic activity, including finances and foreign trade, through a planned economy.

Cuba last reported its foreign debt at $15.8 billion in 2015. It began delaying payments to some suppliers and investors in 2016, with western diplomats and businessmen estimating the short-term debt accumulated since then at more than $1.5 billion.

President Miguel Diaz-Canel told the Assembly that next year the country would slightly reduce the backlog of overdue payments through austerity measures and by drawing on a glut of inventory and emergency reserves.

Diaz-Canel and Gil said plans for the economy to grow 1.5 percent, after an anemic 1.2 percent this year, were based in part on doing away with bureaucratic habits and cutting waste and theft.

“The plan must be executed immediately. We have to review the system to insure there is no room for bureaucrats to maneuver,” Diaz-Canel said, threatening to replace them if they stuck to their old ways.

CRISIS TO CONTINUE

Venezuelan oil deliveries have fallen at least 40 percent since 2014, forcing Cuba to import from Russia and Algeria.

 

Cuba imports more than half the fuel it consumes.

Gil said fuel consumption would be cut from 91 metric tons per million pesos in gross domestic product this year to 84 tons in 2019.

Foreign trade fell around 25 percent from 2013 through 2017, with annual imports dropping to $11.3 billion from $15.6 billion, according to the government.

Gil said trade declined further in 2018, without providing figures.

The minister said exports would increase 6 percent next year while imports would be slashed 11 percent compared with the 2018 plan, in an economy heavily dependent on raw materials and machinery from abroad for nearly everything it produces.

Economist Pavel Vidal, a former central bank analyst who teaches at the Universidad Javeriana Cali in Colombia, called the 1.5 percent growth target “reasonable” as sugar, agriculture and tourism had a particularly bad 2018 due to Hurricane Irma, meaning that growth would come from a low starting point.

“What is most worrisome is the payment crisis, which continues to grow, and creditors are losing patience,” said Vidal, who has authored various reports on Cuba in conjunction with international lending institutions.

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[cookj1]

I feel so bad for the regular/average Cuban.  They just can’t get a foot out of the past.

[peteando]

15 minutes ago, cookj1 said:

I feel so bad for the regular/average Cuban.  They just can’t get a foot out of the past.

Can't help hope for a brighter future for this great people.  Unfortunately it's pretty difficult to borrow money as a country when you haven't paid your debts.  That's where they are really stuck.  

[MD Puffer]

On 1/10/2019 at 6:20 PM, El Presidente said:

"We cannot spend more than we earn,” Economy Minister Alejandro Gil Fernandez said at a session of the National Assembly last week.

Geesh.  Why don't our politicians at home understand this concept?

[Colt45]

What will Tony Castro do?

[JohnInCleveland]

Sooner or later the revolution will be replaced, whether gradually or abruptly.  

 

It's hard to avoid brain drain when you have very educated people with no hope for the future to offer.  

 

The poverty porn of visiting Cuba has its charm but it's followed by a profound sadness. It shouldn't have to stay this way forever.  The spirit of the Cuban people is beautiful, but they deserve so much better.  

[zeedubbya]

33 minutes ago, JohnInCleveland said:

poverty porn

Your phrase of the year my friend!  Tops last years “little brown mouse” by only a smidge.  ?