ECONOMY-CUBA: Tightening the Belt Another Notch

By Patricia Grogg Reprint | | Print |

Patricia Grogg

HAVANA, Sep 4 1998 (IPS) - A programme to upgrade public utilities will not only benefit Cubans by expanding coverage and improving services, but will also put a new crunch on already severely cash- strapped pocketbooks.

The plan to improve telephone services and water and gas supplies, announced in the National Assembly (parliament) in July, will be implemented over the next few years, with special emphasis on Havana, home to 2.2 million of Cuba’s 11 million inhabitants.

A total of 900 million dollars have been earmarked for upgrading telephony, 50 million are to be invested in gas and 10 million in water. The new rates, which went into effect in some areas this month, will be gradually applied throughout the country as coverage expands.

Cuba’s fixed telephone rates have not changed since 1959, the price of cooking gas has remained unaltered since 1933, and water has been supplied free of charge for the past 30 years – although most families began to pay one peso a month last year.

But while Cubans will benefit from the improvements in public utilities, already heavily overburdened family budgets will have to stretch even further.

“I don’t have a single cent left in the bank,” said Georgina Perez, a 46-year-old biologist who in the early 1990s began “to withdraw more and more money out of my account, without being able to deposit anything at all.

“The money that my husband and I saved in the 1980s to go on vacation to the beach with our son has been spent this decade on food, soap and detergent,” she complained.

A new study carried out by experts close to the government found that the buying power of Cuban families has plunged in the past eight years of economic crisis.

Cuba has been caught in the grips of a severe economic crisis since the collapse of the Soviet Union and the disappearance of the east European socialist bloc, when Cuba lost its main trading partners and 75 percent of its export market almost overnight.

The report to which IPS had access puts the average salary in Cuba at 200 pesos. But it clarifies that this is only the nominal income. The study underlines that the value of health care and education, provided free of cost, and food rations distributed by the state at subsidised prices would have to be added in order to calculate real income.

(The Cuban peso is on par with the dollar in official operations, but the dollar is traded for 21 pesos in government exchange bureaus which began to operate in 1995.)

The average income for a family of four in Havana in which two members work is thus 400 pesos. But the study demonstrates that 400 pesos a month is not enough to cover the expenses of a typical family of four, which average over 1,000 pesos a month.

The study’s authors calculate that around 138 pesos a month are spent on the food and products which families purchase at subsidised prices through a “ration booklet,” as well as services like transport, electricity, water, cooking fuel and medicine.

But the crisis has drastically reduced the ration booklet’s coverage of basic necessities, and Cubans have been forced to turn to farmers’ markets operating since 1994 on the basis of the laws of supply and demand, in order to complete the family diet.

Cubans spend an estimated 770 pesos a month on the foods that make up the basic Cuban diet – rice, beans, sweet potatos, cassava, pork and animal fats – according to the study.

A further 100 pesos are spent on garlic, onion and tomato sauce used to flavour food, and a similar amount on articles of personal and household hygiene, which have virtually disappeared from the system of rationed distribution.

The study concludes that a family with two average monthly salaries needs an additional income of more than 700 pesos to meet its basic needs.

Sources of extra income for Cubans are small private businesses – which began to be allowed in selected occupations in 1993 – remittances from family members abroad, the letting of rooms, job bonuses in dollars and the informal economy.

Amidst their daily struggle to put food on the table, families received the news of the programme to upgrade public utilities with mixed feelings.

On one hand, access to telephone services will expand from the current three per 100 Cubans to nine per 100, thanks to the installation of 50,000 public telephones, a digital microwave network, and a data transmission network to be mainly used by government services.

But it will be more expensive to talk on the telephone, because service provided by the digital plants – 70,000 of the country’s 360,000 telephone lines have already been digitalised – will continue to cost 6.25 pesos a month only for those families who do not run over 300 minutes.

This month the telephone bills of those whose services are already being provided by the digital plants began to mark three cents every extra minute from 6:00 to 18:00 Monday through Saturday, and two cents during the rest of the day and on Sundays and holidays.

The change will not go unnoticed in a nation where rates have remained steady since 1959 and people are used to long telephone conversations.

“With the difficulties of transport, I’m used to making constant telephone ‘visits’,” commented Marta Lopez Masa, a secretary in a state company. “I’m afraid my bill this month will be high.”

According to authorities, the rate hikes are aimed at encouraging rational use of telephone services, gas and water and thus boost their capacity, rather than swelling state coffers.

Clean water has been supplied free of charge for the past three decades, although parts of Havana suffer major shortages due to the poor state of the old water supply system. Last year most families began to be charged one peso a month, regardless of consumption or quality of service.

The 10 million dollar investment in the system should improve service by stabilising the sources of supply and eliminating or reducing leakage from the pipes.

The gradual installation of water meters will lower costs for households which consume less than 3,000 litres a month per person, above which level a special rate will be charged.

Similarly, once gas meters are installed, households will be charged 11 cents per cubic metre. Since 1933 the price of gas has remained steady at 4.48 cents per cubic metre. But due to the lack of meters, Cubans have been charged a fixed rate per person.

The government’s new advice seems to be “save energy and pay less” – a message already driven home by electricity bills since rate hikes applied early this decade have forced families to pay attention to saving energy.