CUBA: Economic Growth Expected Despite Sugar Failure

By Dalia Acosta Reprint | | Print |

Dalia Acosta

HAVANA, Jun 12 1997 (IPS) - The Cuban economy could is expected to grow four percent this year despite falling sugar production, said viceminister of Economy and Planning, Osvaldo Casanova.

“This year started with a backlog in the (sugar) harvest and in nickel exports, deteriorating terms of trade and pressure on creditors,” but overall growth will still be relatively strong, although one point lower that that initially foreseen by the Executive.

Meanwhile, Osvaldo Martinez, president of the Parliamentary Economic Affairs Commission, said the reduction in sugar production had made little impact on the official plans and that predictions of a four or five percent growth in GDP were still within reach.

The growth will be fundamentally based on the recovery of the manufacturing sector and on the income generated by services, said Casanova.

But sugar production will present a shortfall, at only 4.2 million tons instead of the 4.5 million hoped for by the Fidel Castro administration.

The reduction seen in this sector, the biggest hard currency earner in the country, is partly due to the late arrival of external prefinancing, worth around 350 million dollars.

Casanova was speaking at the Sixth Congress of the Association of Economists of Latin America and the Caribbean which opened in Havana Wednesday, attended by more than 300 delegates.

The meeting, which coincided with the Tenth Congress of Economic Science Professionals of Central America, will continue until Friday, examining the impacts of globalisation on the adjustment plans of regional economies.

The main course of the meeting will be presented by Cuba, particularly in relation to the reform package applied in order to bring it out of the economic crisis which began in 1990 and the effects of the strengthening of the blockade imposed by the United States.

According to Casanova, the economic recovery is showing a tendency towards consolidation following plummeting figures in all sectors which caused a fall of 34.8 percent in GDP between 1989 and 1993.

Local experts saw the causes of the depression as a combination of the effects of internal errors in economic management, the loss of trading partners in the defunct European soviet bloc and the US blockade.

The tendency towards recovery appeared gradually with a 0.7 percent growth in GDP during 1994, 2.5 percent in 1995 and 7.8 percent last year.

This lift-off coincided with the introduction of a package of reforms which included the legalisation of the dollar, the streamlining and cleaning up of internal finances, broadening the category of permitted self-employment and opening up the agricultural markets, allowing the rules of supply and demand to come into play.

At present, the transformations underway include an opening up to foreign capital, banking reform, business reshaping, the restructuring of the labour system and handing over the usufruct majority of State lands into the hands of rural workers and co- operatives.

The government is aiming for the adjustments to have the lowest possible social cost, limiting redundancies and cutbacks in services to the essential minimum, stated Casanova.

However, he recognised there were inequalities between different groups of the population depending on where they live.

The main objectives of the government strategy for this year is to prioritise efficient growth, clean up internal finances and reduce the foreign trade deficit.