Cubans face hardship under new austerity measures

Cubans face hardship under new austerity measures
Mon Jun 1, 2009 3:34pm EDT
By Marc Frank

HAVANA (Reuters) - Cubans faced power blackouts, longer waits for buses,
uncomfortable working conditions and skimpier lunches on Monday as the
government introduced austerity measures to cope with a growing economic
squeeze.

The measures followed two weeks of warnings by the Communist-run
government that it could not meet rising electricity demand due to a
cash crunch that has forced it to restructure debt and put off payments
to foreign businesses.

Cuba, like other Caribbean countries, has been hit hard by the global
financial crisis, which has slashed revenues from key exports, dried up
credit and reduced foreign investment.

It is also recovering from three hurricanes that struck last year,
causing an estimated $10 billion in damages.

All provincial governments and most state-run offices and factories,
which encompasses 90 percent of Cuba's economic activity, were ordered
to reduce energy consumption by a minimum of 12 percent or face
mandatory electricity cuts.

The state-monopolized retail sector and many government offices were
ordered to keep air conditioners turned off until 1:30 p.m., turn off
some lights and shut off freezers for at least two hours a day, local
media reported over the weekend.

Long lines formed at bus stops in Havana as the number of bus runs were
cut, and trains between the capital and provinces were reduced by a
minimum of 50 percent, although more passenger cars were added to each trip.

Food allocations for lunches and snacks at most state workplaces were
cut by 50 percent, except for workers in heavy industries like mining
and construction, food industry sources said.

MEAT ORDERS CUT

The austerity measures reminded Cubans of the hardships that followed
the 1991 collapse of the Soviet Union and the loss of $5 billion in
annual subsidies Moscow provided.

"Everyone is worried and talking about how bad it might get, and if the
blackouts are back," a Havana resident who works for the power sector said.

Cubans typically get free state-provided meals when accompanying
hospitalized relatives, but the new rules put a stop to that, except for
people traveling from out of town, hospital sources in Havana said.

A U.S. businessman who sells meat products to the Cuban government under
an exemption to a U.S. trade embargo, told Reuters, "They have cut their
orders by more than 50 percent for the rest of the year."

Cuba imports two-thirds of the fuel it consumes from ally and
hydrocarbons producer Venezuela, which has seen its own oil revenues
plummet 50 percent this year.

Economy and Planning Minister Marino Murillo recently said Cuba's growth
forecast for 2009 was reduced from 6 percent to below 2.5 percent.

Some local economists believe this year's growth will be 1 percent or
less, similar to forecasts for the region.

Cuba has long blamed shortages of food and other necessities on the
47-year-old U.S. trade embargo against the island. But Cuban President
Raul Castro, who took over from his ailing older brother Fidel Castro
last year, has launched wage and agricultural reforms in a bid to boost
productivity.

"Under Raul we thought we were going to get some breathing room and now
look," a middle-aged Havana resident called Maria said as she waited for
a bus in the capital.

(Editing by Jeff Franks and Pascal Fletcher)

Cubans face hardship under new austerity measures | International |
Reuters (1 June 2009)

http://www.reuters.com/article/worldNews/idUSN0140188020090601?sp=true