CUBA-ECONOMY: Reform Process Slow but Steady

By Dalia Acosta Reprint | | Print |

Dalia Acosta

HAVANA, Mar 5 1997 (IPS) - The economic reform process initiated in 1993 by the government of Fidel Castro to pull Cuba out of the crisis into which it began to sink early this decade is moving forward slowly but steadily, a high-level meeting reported here Wednesday.

Participating in the fourth annual round table on Cuba, held in Havana under the auspices of the British magazine ‘The Economist’, were high-ranking Cuban officials and some 100 business executives, bankers, consultants and economists. The meeting, held behind closed doors, ended Wednesday.

The round tables are considered a barometer for measuring the recovery of the Cuban economy and the functioning of the reforms.

Cuban Minister of Economy and Planning Jose Luis Rodriguez told the press during a break that reforms in Cuba had not been “frozen,” in spite of the U.S. Helms-Burton law. Approved by President Bill Clinton a year ago, the law stiffens the 36-year embargo against Cuba and stipulates sanctions for foreign firms that gain a stake in property expropriated from U.S. owners after the 1959 revolution.

A full 17 percent of all foreign capital in Cuba was invested after the enactment of the law, Rodriguez underlined, and 40 foreign firms are interested in operating in new duty-free zones to be established in Cuba.

Local experts had predicted that the government’s economic reforms and its opening of the economy would be hardest hit by the Helms-Burton law.

But the reforms, considered “essential” to Cuba’s survival, have continued, albeit cautiously, the minister added. In late 1995, the reforms began to be extended to the productive sector, and over the past year, textiles, electronics, glass and paper have been restructured.

Besides an in-depth restructuring of firms, the reforms have included technological reconversion and the reorganisation of employment. Large loss-making enterprises are being replaced by small and medium-sized firms, and under-employment is being eliminated, in the search for greater efficiency and modernisation.

The current crisis, the worst in 50 years, broke out in 1990 with the collapse of the Eastern Bloc and the Soviet Union, the impact of which was added to the U.S. embargo.

According to official figures, the Gross Domestic Product (GDP) fell 34.3 percent in 1993 – at the peak of the crisis – with respect to 1989. The trend began to turn around in 1994, when the economy grew 0.7 percent. It continued to expand, by 2.5 percent in 1995 and 7.8 percent last year.

The reforms have included the legalisation of the dollar, the opening of free agricultural markets, the expansion of areas in which self-employment is allowed, and a series of measures for restructuring internal finances.

Rodriguez stressed that in contrast with industrial reconversion experiences in other countries, the government guarantees workers’ jobs in Cuba.

The Ministry of Labour and Social Security reported this year that of the close to 19,000 workers who had become “available,” some 7,200 have been temporarily located in other jobs. “Available” workers draw 60 percent of their salaries until they are relocated.

The Ministry of the Economy said the reforms planned for 1997 will go ahead in spite of the liquidity problems being suffered by state coffers. Cuba’s foreign debt exceeds 11 billion dollars.

The president of the National Bank of Cuba, Francisco Soberon, said Wednesday that new bilateral medium and long-term credit transactions had been secured, but he believed that a multilateral rescheduling of the debt would not be undertaken any time in the near future.

He added that the restructuring of the banking system was aimed chiefly at Cuba’s insertion into international financial markets.