CUBA: Economic Crisis in the Rearview Mirror

By Dalia Acosta Reprint | | Print |

Dalia Acosta

HAVANA, Jul 8 1996 (IPS) - Improvements in the main sectors of the Cuban economy confirm that the “bad times are already over,” according to government indicators.

“I think we have been through the worst, and better times are waiting for us,” said Economy Minister Jose Luis Rodriguez, the recovery is now “irreversible,” he added.

According to official sources, during the first six months of this year, the Gross Domestic Product (GDP) maintained a steady growth rate of seven percent, though predictions for the end of 1996 still stand at five percent.

Between 1990 and 1993 the GDP fell 34.2 percent in relation to 1989, as the result of a crisis which affected all the economic sectors.

Three years of marked drops finally gave way to timid signs of recovery from 1994 on, which showed a 0.7 percent increase in relation to 1993.

The positive tendencies appeared to become more settled at the end of last year when government sources announced GDP had increased 2.5 percent.

A report from the National Bank of Cuba (BNC), circulated in a restricted form in December, calculated the GDP of last year at 13.19 billion pesos compared with 19.335 billion in 1989 and 10 billion in 1993.

However, specialist calculations assured that at the current rate of growth, it will take 10 years before Cuban can recover 1989 levels.

The outlook is based on estimations of per capita GDP. This factor reflects the real significance of the recovery, but for the moment, the government is keeping the information under its hat.

Rodriguez said foreign investment has played an important “though not decisive” role over these years, although he said the basic elements for recovery had been provided by the efforts of the nation alone.

Speaking at a meeting of Young Communist leaders in Havana last week, Rodriguez said “it is the unrelenting internal effort which promotes economic growth.”

The authorities are now trying to play down the contribution foreign investment has made in the island, though this was once considered the most dynamic element of the economy and the main spur to recovery.

Sources in the Ministry of Foreign Investment and Economic Collaboration said that at the end of last year more than 200 mixed companies and economic associations had been formed with foreign capital, which reached the level of 2.1 billion pesos (officially on a par with US dollars).

Rodriguez said at present most types of production are showing increases, except for milk, eggs and meat. Official sources added coffee to the list last week, as the crop saw the worst harvest of recent years.

He explained that growth rates could vary over the next few years, “but it would not be reasonable to expect a return to the situation left behind in 1993.”

Vicepresident Carlos Lage said on June 15 that there had been increases of more than 40 percent in tourism in the first six months of this year, 25 percent in tobacco, and 22 percent in agricultural production.

According to official predictions, Cuba will reach the best ever nickel production levels in history this year, at 50,000 tons, 40 percent up on 1995 levels.

Sugar, the biggest national export showed the first signs of improvement after a 1994-95 harvest considered the lowest since 1959, with total production of 3.4 million tons.

According to the latest reports, production this year topped 4.44 million tons, towards a planned 4.5 million – considered the minimum necessary to satisfy internal demand and the international needs.

Trabajadores, the Cuban workers organisation newspaper said Monday that the growth of sugar production in 1996 would be “extraordinary,” but did not publish any figures.

According to the paper, this information will be released on Jul. 26 with the celebration of the “National Rebellion Day,” when President Fidel Castro will make a speech in a public square.

Official sources reported growth in oil, electricity production, the fishing, light industry and food sectors, predicting a 20 percent increase in exports for this year.

The budget deficit, the source of one of the government’s worst “headaches” in recent times, will fall to 500 million pesos by the end of 1996, ten times lower than 1994.

All this does not mean to say that 1996 will pass without tensions,” said Rafael Calcines, economic expert at the National Information Agency (AIN).

The foreign debt, which stands at above 9.6 billion dollars according to the National Bank of Cuba, will still be an impediment when the nation seeks the loans needed to complete economic recovery.

For Rodriguez, the chances of solving the debt problem depend on the nation gaining “credibility” as it gradually proves the “solidity” of its recovery.