ECONOMY-CUBA: Light at the End of the Tunnel?

By Dalia Acosta Reprint | | Print |

Dalia Acosta

HAVANA, Jul 7 1995 (IPS) - Cuba’s Gross Domestic Product (GDP) has dropped 34.3 percent over the last five years due to the hard- hitting economic crisis plaguing the country, the National Office of Statistics (NOS) announced on Friday.

The report released Friday is the first of its type published by the NOS since 1989.

According to the state office, the country’s GDP showed a 0.7 percent growth from 1993 to 1994, in contrast to the steady fall registered in the previous five years.

The official figures confirm declarations by Cuban authorities and experts on the current change in the economic trends seen in the country from 1990 to 1994.

Alfonso Casanova, Deputy Minister of Economy and Planning, had stated late last year that Cuba had entered “the last stage of the depressive phase of its economic cycle.”

The crisis broke out in 1989, when Cuba lost all its main trading partners when the socialist bloc disappeared in Europe.

The need to insert itself in the international market, with totally different playing rules, was added to internal errors and the 34-year-old U.S. embargo to drag the country into the worst crisis seen in the last three decades.

However, only in 1990 did the full impact of the depression begin to be felt in the various sectors of the economy and in the daily lives of Cubans.

The NOS report indicates that during 1994, activity in the following areas fell off: agriculture, hunting, forestry and fishing (4.9 percent); transportation, storage, and communications (3.4 percent); and services (1.8 percent).

The steady fall of the sugar production has been one of the major factors blocking economic recovery.

According to government sources, the 1994-95 sugar harvest fell to a record low of 3.4 million metric tonnes, while a possible recovery of the pillar of the Cuban economy will not become clear until 1996.

The document reveals that the areas that have shown growth are the extraction of crude oil, the generation of electric power, steel, fertilisers, cement, lobster fishing, textiles, bread, tyres and cigarettes.

Nevertheless, only the first of those mentioned reached levels higher than those seen in 1989. Local experts attribute that positive result to the presence of foreign capital in the exploration and exploitation of crude oil.

In 1994, Cuba produced 7.2 million tonnes of oil, six percent more than in 1993, which made a 9.7 percent increase in electricity generation possible, and led to a decrease in long power cuts.

The NOS interpreted the consolidation of geographic diversification of foreign trade, the increased foreign investments and the financial cleansing measures helping to form a more favourable economic outlook than in previous years.

However, all said and done, production levels did not regain pre-special period levels, though exports increased 15.6 percent, bringing in 1.3 billion dollars.

Harsh financial measures led to a 1.1 billion peso (officially on a par with the dollar) reduction in liquidity, while the budget deficit plunged 3.6 billion and loss subsidies reduced by more than 2 billion pesos.

A document from the Economic Comission for Latin America and the Caribbean (ECLAC) in June recognised that the economic policies of the Cuban government had “begun to bear fruit” but at a “high social cost.”

“The adjustment and increased productive efficiency measures are creating socioeconomic inequalities,” warned the report, stressing the reduction of real salaries which adversely affects purchasing power.

Meanwhile, the NOS stated that the health, social security and education systems have managed to maintain levels similar to previous years, despite the economic crisis.