By Dalia Acosta
HAVANA, Oct 29 2001 (IPS)

Government officials and the state- controlled press in Cuba are working hard at calming fears on what lies ahead for the economy, which has begun to show negative signals before it has even gotten back on its feet from the crisis of the 1990s.

“Our people can be confident and calm, because our country is much better organised and on a much stronger economic footing” than in 1990, Vice-President Carlos Lage told the press Sunday – just a few days after President Fidel Castro warned Cubans to prepare for “new sacrifices.”

The Sep 11 terrorist attacks on New York and Washington have led to a contraction in international tourism, which normally brings Cuba annual earnings of two billion dollars. Remittances sent to Cuba from emigrés in the United States have also dropped.

Tourism and remittances – which range from 800 million to one billion dollars a year – are Cuba’s two main sources of foreign exchange.

An employee at CADECA S.A., the firm that runs the government exchange bureaux, who preferred to remain anonymous, told IPS that the remittances sent to Cuba through bank transfers, mainly from the United States, had shrunk 60 percent in the past few weeks.

The drop in arrivals, meanwhile, was immediately felt by Cuba’s socialist government, which has closed 20 hotels, and by around 8,000 workers, who were sent home, as well as by privately-owned businesses and services, which mainly depend on foreign tourists.

Another problem facing Cuba are the low prices for sugar and nickel, two of the island’s chief exports. Moreover, this year’s sugar harvest was a mere 3.5 million tonnes.

On Saturday, the government published the details of an energy- savings programme to be applied to the state sector, while a plan containing broader emergency measures was reportedly distributed to high-level officials, according to off-the-record sources.

Among the rumoured “sacrifices” are a drop in incomes, scarcity of certain goods, a reduction in public transport services, fuel shortages and an increase in power outages.

The emergency measures will reportedly include the cancellation of investments in the tourism industry, a freeze on imports of vehicles and luxury items, restrictions on Central Bank subsidies for loss-making companies, and a reduction in the incentives provided to “outstanding workers” and party leaders, said sources consulted by IPS.

While public enterprises get ready to tighten their belts, there has been murmuring about a new “special period” – the government’s euphemism for the crisis triggered in 1990 by the collapse of the Soviet Union and the East European socialist bloc.

But Vice-President Lage, one of the government’s chief economic policymakers, gave his assurances that the hard times, which peaked in 1993 and 1994, would not return. And according to Castro, no country is better prepared “to deal with any problems” that could crop up than Cuba.

The Cuban economy shrank 34.8 percent in the first three years of the last decade, according to official statistics. The depression led to daily blackouts, food shortages, a deficit in public transport, and the depreciation of the peso against the dollar.

The Cuban peso stood at around 150 to the dollar in August 1994 when some 30,000 Cubans headed towards the United States in an impromptu exodus of “rafters”. That year, the economy finally grew slightly, by 0.7 percent.

A new fall in the peso reported in the past few days is merely a “momentary” occurrence linked to the slump in tourism, said the vice-president.

However, according to the CADECA S.A. employee, “after hovering between 20 and 22 to the dollar for several years, the peso now stands at 26 to the dollar, and it’ll soon depreciate to 30, and could even plunge to 50.” Cubans earn an average salary of 200 pesos a month.

According to Lage, the economy will grow four percent this year, down from the government’s original projection of five percent, but higher than the forecasts set forth by independent sources, who predict three to 3.5 percent growth.

Authorities are also confident that the drop in tourism will be “a transitory phenomenon” that will be resolved towards the end of the year, with the start of the high season.

Tourism Minister Ibrahim Ferradaz admitted that the number of arrivals had dropped five percent in September with respect to the same month last year, and 13 percent in the first two weeks of October.

The tourism sector is expected to close the year with growth of between five and seven percent with respect to 2000, down from the originally projected 12.7 percent, said Ferradaz.

Minister of Foreign Trade Raúl de la Nuez underlined that in the first nine months of the year, Cuba’s foreign trade grew five percent on the same period last year, with exports growing nine percent and imports three percent – “evidence”, said the minister, that the economy continued to enjoy a “steady rate of recovery.”

According to Cuba’s statistical yearbook, published by the National Office of Statistics, exports totalled 1.7 billion pesos (on par with the dollar at the official exchange rate used for government dealings) and imports 4.9 billion.

Cuba imports more than double what it exports, an imbalance that experts see as one of the country’s most pressing economic problems.

De la Nuez spoke Sunday at the inauguration of the 19th edition of the International Fair in Havana, which has brought together 1,650 companies from 60 countries, including the United States, as well as 430 Cuban enterprises, through Nov 4.

According to local authorities, the fair itself is proof that the current situation is far different from the circumstances that led to the 1990s crisis.

In 1989, Cuba was almost totally dependent on the former East European socialist bloc, where 85 percent of its trade was concentrated. Today, it has trade ties with 166 nations.

De la Nuez reported that up to September, 44 percent of Cuba’s foreign trade was with Europe, 39 percent with Latin America and the Caribbean, 15 percent with Asia and the rest with Oceania and Africa.

Experts consulted by IPS agreed that a crisis of the severity of the one that gripped Cuba from 1990 to 1994 was unlikely. But they also said warning signs had begun to be seen when the island had not yet pulled out of the depression of the 1990s.

Studies indicate that it would take Cuba 10 years to return to the living standards of the late 1980s. “Any economic deterioration will make that possibility even more distant,” commented an economist who asked not to be identified.

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