ECONOMY-CUBA: More Tough Times Ahead in 2002

By Patricia Grogg Reprint | | Print |

Patricia Grogg

HAVANA, Dec 28 2001 (IPS) - María Josefina Bolaños, who left her steady public sector job in Cuba in the mid-1990s to set herself up in business as a hairdresser in an attempt to boost her income, is under no illusions that the coming year will be any easier.

“There is no doubt that another tough year lies ahead. People are worried,” Bolaños, 55, told IPS.

Even local authorities admit that 2002 will bring continued economic difficulties and that Cubans will have to continue tightening their belts, due to the international recession.

Although government officials have acknowledged that 2002 “will be unavoidably difficult,” they say there will be no reason for “despondency or dejection,” and have given their assurances that there will be no scarcity of food.

The largest shares of next year’s budget are assigned to education and public health, services that along with social security are provided free of charge to all of Cuba’s 11.2 million people.

“There are many question marks regarding the coming year, but the logic of events points to a scenario of global economic crisis, from which we will not be able to isolate ourselves,” said Osvaldo Martínez, the chairman of the Cuban parliament’s economic affairs commission.

The global recession has led to a collapse in the prices of Cuba’s main exports – sugar, nickel and tobacco – and could delay the recovery of tourism – the island’s chief foreign-exchange earner – in the wake of the Sep 11 terror attacks in the United States.

Sugar export revenues fell by more than 100 million dollars this year with respect to 2000, while the foreign exchange earnings brought in by nickel dropped by 150 million dollars.

Meanwhile, Cuba spent over one billion dollars on oil imports, despite the fact that locally produced petroleum covers around one- third of the country’s energy needs.

Although nickel production was up from last year’s 70,300 tons, the market price plummeted from 8,640 dollars to 4,715 dollars a ton, without any signs of improvement on the horizon.

In addition, the sad performance of the sugar industry, which only produced 3.6 million tons this year, and a plunge in tourism contributed to economic growth of just three percent for 2001, two percentage points lower than projected.

Official sources say tourism brings the country about two billion dollars in annual revenues, followed by 550 million dollars in sugar sales and 300 million dollars in nickel exports.

However, many Cubans have a lifeline – money sent home by family members living abroad. Hairdresser Bolaños, for example, cannot actually complain about her personal situation, because a sister who lives in Miami sends her regular checks to help support their 80-year-old mother.

Family remittances are another important source of foreign exchange in Cuba, estimated at 800 million to one billion dollars a year. However, the inflow of money orders has also apparently dropped due to the economic recession in the United States, where most Cuban exiles reside.

The outlook in Cuba was further aggravated by the Nov 4 passage of Hurricane Michelle, which caused an estimated 1.8 billion dollars in damages.

But even before the storm devastated a large part of the island, Castro had warned that “inevitable sacrifices” would have to be made by a population that has been suffering scarcities since the early 1990s, after the break-up of the Soviet Union, Cuba’s vital source of trade and aid.

After tumbling 35 percent in the first half of the 1990s, the Cuban economy had begun to give off mild but steady signs of recovery, with average growth of four to 4.5 percent.

“Just when we thought we were climbing out of the pit, new sacrifices are announced,” complained María Julia González, a 48- year-old mother who was doing her shopping on Dec 24 for “a small Christmas dinner.”

González’s biggest worry is how she will feed her three children if things get any tougher than they already are. “The oldest, who is 18, has clear memories of the worst years of the crisis, after the Soviet Union disappeared,” she told IPS.

At the peak of the crisis, Cubans were consuming an average of 1,863 calories and 46 grams of protein a day – just 74 and 61 percent, respectively, of the internationally recognised daily nutritional requirements.

Although the diets of Cubans have improved, those levels have only risen to 2,400 calories and 65 grams of protein a day, still lower than the required 2,500 calories and 75 grams of protein.

Authorities say they will make an effort to improve the average diet of Cubans and ensure the quality of the products that make up the minimum basket of food.

But according to Marta Beatriz Roque of the Cuban Institute of Independent Economists, a dissident group, “ensuring the minimum basket does not ensure anything, because it only actually covers the first 10 days of the month.”

Roque said the crisis would only get worse, bringing greater difficulties to the lives of Cubans.

To meet their daily nutritional requirements, Cuban families must buy products sold in the network of stores that only accept dollars. In the authorised foreign exchange houses, the Cuban peso stood at 27 to the dollar in late December, five pesos up on September.