Cuba wrestles with financial crisis

Cuba wrestles with financial crisis
Submitted by amir azree on Friday, June 4th, 2010
Friday, June 4th, 2010 15:02:00

HAVANA: Cuba's foreign trade plunged by more than a third in 2009, with
imports from traditional allies including Venezuela and China down
sharply, the latest sign that the island is wrestling with a deep
financial crisis.

Trade for 2009 totaled US$12.7 billion (RM ), down 34 per cent from the
US$19.3b registered the previous year, according to statistics released
yesterday by the government's National Statistics Office.

The sobering figures are in line with previous disclosures that showed
trade to major trading partners down by about a third.

Cuba's economy is weak in the best of times, but its condition has
worsened considerably due to the global economic crisis, a drop in the
global price of raw materials such as nickel, and the fallout from three
devastating 2008 hurricanes.

The government has been forced to cut back on deep subsidies that Cubans
rely on to make ends meet. Under Cuba's communist system, workers make a
tiny salary of about US$20 a month, but the state provides free
education and health care, virtually free housing and transportation,
and ration cards that can be used to purchase a limited amount of
heavily subsidised food.

President Raul Castro has warned repeatedly that some of the subsidies
must be phased out and that belt-tightening is in order. He has urged
his countrymen to increase production and cut out waste. The government
has also been on an anticorruption drive, firing a number of senior
officials.

The statistics released yesterday show imports were down the sharpest,
falling 37 per cent to US$9.6b, from US$15.4b in 2008. Exports for 2009
fell 21 per cent to US$$3.1 billion.

The larger drop in imports brought a silver lining: Cuba reduced its
trade imbalance for the year to US$6.5b, down from US$11.4b in 2008.

Imports of fuel and related products fell to US$2.9b, down 42 per cent
from the US$4.9b registered in 2008. Cuba has urged its citizens to use
less fuel, and has clamped strict controls on the use of air
conditioners and gasoline in offices and by state workers.

Food imports were also down, dropping to US$1.6b from the US$2.4b
registered in 2008.

The news follows reports from China and the United States showing a
severe drop in Cuban imports.

The United States has maintained a trade embargo on Cuba for 48 years,
but an exception allows Cuba to purchase food products from its northern
neighbor. America is the top provider of food to the island, despite the
countries' political differences.

The Cuban statistics office said trade with the United States totaled
US$729 million in 2009.

http://www.mmail.com.my/content/38726-cuba-wrestles-financial-crisis