ECONOMY-CUBA: Living Conditions Improve – Officially

By Dalia Acosta Reprint | | Print |

Dalia Acosta

HAVANA, Oct 18 1999 (IPS) - Living conditions for Cubans, battling a nine-year-long economic crisis, at last are showing signs of improvement, according to vice President Carlos Lage.

“There are improvements in the living conditions of the population,” Lage said in a report presented recently to the municipal government leaders.

Lage, together with President Fidel Castro is considered the principal strategist of Cuban economic policy. Previously he had insisted that the incipient recovery of Cuba’s ailing economy had not had any significant impact on the country’s 11 million people.

His latest report, however, shows that in September there was decrease in power cuts, improvements in food stocks and certain services like water, gas and telephone, and increases in the average wage and banking activity of the population.

Economic analysts agree that, while the worst of the recession appears over – after a crisis that saw the gross domestic product (GDP) slump nearly 35 percent in a three-year period – it will take more than 10 years for Cuba to regain its pre-crisis economic level.

Economists and state authorities recognise the huge social cost of the crisis and the reforms introduced by the government since possession of U.S. dollars was authorised in 1993.

This resulted in a chasm opening up between those who held dollars and those without access to the U.S. currency while wages paid to Cubans lost a large part of their value and wealth became concentrated within certain sectors of the population.

A study by the World Economy Research Centre, part of the University of Havana, calculated that in the last decade, the poorest 20 percent of the Cuban population earned 11.3 percent of all income, while the richest 20 percent received 33.3 percent.

Cuba does not publish official statistics on the distribution of wealth, but a rough estimate of social disparities in the nineties is possible by looking at bank deposits.

Sources in the finance sector say that for the past three years, 67.2 percent of all savings accounts have contained just 2.4 percent of total deposits, while 12.8 percent of accounts hold 84.5 percent of deposits.

“The crisis has changed this country…” says Mariela Diaz, a 28-year-old psychologist but “the worst times are over.”

In the early 1990’s had money in local currency but there was hardly anything to buy. Now, her problem is she does not have enough dollars to survive in the dual currency system

“With my salary and my husband’s, we have barely enough to buy a few dollars and cope with the high food prices. We survive by waiting for remittances from our relatives in the United States and by counting every penny,” said Diaz.

Her situation is in stark contrast to that of Cubans who provide services to foreigners who pay paying in dollars, such as those who operate businesses connected with tourism, taxi drivers – or who run illegal enterprises.

Peasant farmers, who tend to unload their products quickly before prices in agricultural markets go any lower, have become the social sector with the greatest concentration of available cash.

State authorities note that one of the symptoms of the economic recovery and its impact on living conditions is the strengthening of the Cuban peso, which went from 140 to the dollar in government- run exchanges to 20 to the dollar this year.

In the first nine months of 1999, currency exchanges purchased some 400 million pesos worth of dollars, triggering a two percent fall in the peso’s liquidity.

The latest Lage report, published by the newspaper Granma, says that in the first half of this year, the island’s GDP grew by 6.1 percent and commercial sales by 8.7 percent.

State industrial and food markets recorded sales of 1.372 million pesos. Total wages through September increased by 300 million pesos, due to 30 percent salary hikes in health, educations and other sectors of the economy.

The average salary increased by 13 percent.

Regarding the power outages that have plagued Cuba for up to 12 hours a day in for the past four years, Lage said that “the programme of cuts is not being maintained,” and that in the short term, the country will “achieve an (electrical) generation capacity greater than the maximum demand.”

According to figures released by the vice president, Cubans are eating better – consumption having increased from less than 2,000 kilocalories per person between 1993-95 to 2,300 in 1998. But this was still below the estimated minimum of 2,400 kilocalories medicial authorities say is needed.

The daily per capita protein consumption went from an average of 45 grams in that same three-year period to more than 60 grams today.

Studies indicate that the shortages of food and constant power outages were a source of major aggravation for the Cuban population in 1994, the year of the so-called “refugee crisis” which saw the exodus of 30,000 people seeking to reach the shores of the United States on flimsy rafts.

Despite the advances of last month, Lage says the impact of the recovery “does not ignore the gravity of the difficulties” the island still faces and “the material limitations still endured by the population.”

The long economic crisis has been a heavy blow to Cuba’s housing and transportation sectors, where the investment level “is totally insufficient for the country’s needs” and seriously undermines the living conditions of the people, Lage says. (FIN/IPS/da/dm/if-ip/ks/mk/99)