Cuba slashes projections for 2009 imports, exports

Cuba slashes projections for 2009 imports, exports
Tue Jul 21, 2009 3:16pm EDT
By Marc Frank

HAVANA (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 www.one.cu.

(Editing by Jane Sutton and Kenneth Barry)

Cuba slashes projections for 2009 imports, exports | Reuters (21 July 2009)
http://www.reuters.com/article/GCA-Cuba/idUSTRE56K5PJ20090721