Report says Cuban economic growth hasn’t quickened despite reforms

Posted on Monday, 07.01.13

Report says Cuban economic growth hasn't quickened despite reforms
BY JUAN O. TAMAYO
JTAMAYO@ELNUEVOHERALD.COM

Cuba said Monday its economy will grow by no more than 3 percent this
year, about the same as in 2012 but far short of the 3.6 percent goal
and another indication that ruler Raúl Castro's reforms are generating
little new economic activity.

Castro, nevertheless, seemed pleased with the reports on his reforms
submitted Friday to a meeting of the Council of Ministers and detailed
in a story Monday in Granma, the official newspaper of the ruling
Communist Party.

"We continue advancing and the results can be seen. We are moving at a
faster pace than can be imagined by those who criticize our supposed
slow pace and ignore the difficulties that we face," he was quoted as
saying at the meeting.

Since succeeding older brother Fidel in 2008, Castro has allowed more
private enterprise and cut state payrolls and subsidies. But many
economists have dismissed his reforms as too slow and too weak to rescue
Cuba's Soviet-styled economy.

Minister of the Economy and planning Adel Yzquierdo told the Cabinet
meeting that he expects Gross Domestic Product will grow by between 2.5
and 3 percent, far short of the 3.6 percent goal. The country's GDP grew
by 3 percent last year.

GDP growth for the first half of this year was estimated at 2.3 percent,
compared to 2.1 percent for the same period last year, he added. Cuba
uses a unique way of counting GDP that exaggerates the number when
compared to other countries.

Yzquierdo blamed the shortcomings on a broad range of factors that went
from last year's Hurricane Sandy — it caused an estimated $2 billion in
damages — to what Granma called "the deficiencies that are part and
parcel of the Cuban economy."

Granma and Yzquierdo ticked off a list of reasons for the economic
stagnation, from delays in projects to broken contracts and "the low
productivity and shortage of the labor force" as well as the economic
situation in Latin America and the rest of the world.

Spending on social services remained stable for the first semester of
this year, Yzquierdo declared, and many parts of the economy grew at a
2.9 percent clip or better. But the sugar harvest fell 192,000 tons
short of goal and bean production fell 6,000 tons short.

Government spending on construction and other capital projects was 16.6
percent higher than in the first semester last year but 9 percent short
of goal because of delays and others issues, the minister said.

Exports grew by 5 percent, Granma reported, and lower prices on imported
food meant savings of $168 million. But shortcomings in Cuban farming
forced the government to import an unplanned $46 million worth of food.
Cuba must import more than 70 percent of the food items it consumes, at
a cost of more than $1.5 billion a year.

Underlining Cuba's economic stagnation, Vice President Marino Murillo,
in charge of implementing the Castro reforms, told the Cabinet that the
government will "promote" the use of bicycles to cover gaps in public
transportation, according to Granma.

"We will evaluate the sale at cost of parts for their maintenance,"
Murillo was quoted as saying in the lengthy Granma report summing up the
Cabinet meeting.

The government sold Cubans more than 1 million bicycles, most of them
made in China, after the Soviet Union collapsed in the early 1990s and
halted it massive cash and oil subsidies to the communist-ruled island.

But by 1996 about one-third of Havana residents had stopped using their
bikes because of the lack of spare parts, the bad state of Cuba's
streets and lack of night lights, according to a report in 2011 by the
Agence France Press news agency.

The AFP report noted that Havana authorities had already decided to cut
the price of spare parts by 30 percent, guarantee the work of 105 repair
shops and 110 air pumping stations and try to create about 100 miles of
bike lanes.

Murillo also listed a series of problems with the public transportation
system — bus passengers not paying their fares and bus company employees
stealing the money, and a black market for fuel and spare parts mostly
stolen from state enterprises.

The government plans to use plastic cards to control fuel purchases by
public transport employees — the principal source of black market fuel —
crack down on the theft and offer higher salaries to sector workers, he
said, without raising prices.

Source: "Report says Cuban economic growth hasn't quickened despite
reforms - Cuba - MiamiHerald.com" -
http://www.miamiherald.com/2013/07/01/3480625/report-says-cuban-economy-is.html