"Importing is Cheaper Than Producing," Laments Cuba’s Minister of Economy and Planning

The Minister of Economy and Planning, Alejandro Gil Fernández, appeared on national television on Monday to dispel doubts about the Cuban economy. (Round Table / Archive)

14ymedio bigger14ymedio, Zunilda Mata, Havana, 25 June 2019 — Popular concerns about the worsening economic situation in the country have led the Minister of Economy and Planning, Alejandro Gil Fernandez, to appear on national television on Monday to dispel doubts. “We are not going to have a second Special Period,” said the official, who lamented that “today importing is cheaper than producing in the country.” 

For more than a decade, since Raúl Castro assumed the presidency of the country in February 2008, one of the slogans most repeated by the Cuban government has been the need to “replace imports.” But the calls to reduce purchases abroad have been met with the monetary reality of the country, divided for a quarter of a century between the dual currency system comprising the Cuban peso (CUP) and the convertible peso (CUC).

Along with the two currencies, different exchange rates work for different sectors of the economy. A dollar can be equivalent to 1 CUP or 24 CUP, depending on whether it is a state or private entity. These distortions contribute to discouraging local production and “as long as this monetary environment persists, we have to find a way to directly finance the national industry,” the minister said.

“Today the country spends more than one billion dollars on the importation of food and not everything can be produced in Cuba, but a part of it could,” he said. “Today more than 900,000 tons of corn are purchased abroad for animal feed; this year the country is expected to produce more than 130,000 tons.” The greatest expenditures are for food and fuel.

Using great car, to avoid the phrases that generate alarm, and replacing “crisis” or “recession” with concepts such as “complex conjuncture” or “economic tension,” the head of the economy blamed the application of Title III of the United States’ Helms-Burton Act, in addition to the recent ban on cruise ship travel, for the difficulties in achieving the goals set.

In May, the Administration of Donald Trump approved the enforcement of this part of a law that punishes those who profit from properties that belonged to US citizens that were confiscated after the coming to power of Fidel Castro in January 1959. The first lawsuits have already been presented in US courts and are considered by specialists as a “bucket of cold water” for potential investors on the island.

Gil Fernandez also blamed the US embargo for the current situation, although he admitted that there are “internal shortcomings: productivity problems, deficits in the investment process, breaches of export revenues, lack of incentives to export more, diversion of resources (a euphemism for ’theft’), indiscipline, obstacles and bureaucracies.”

The minister alluded to the words of the President Miguel Díaz-Canel, who recently, during the Congress of the National Association of Economists and Accountants of Cuba (ANEC), recognized the existence of an “internal blockade,” a concept that until then was only voiced by opponents of the government and by the most critical voices within the island’s academics.

“Today we have a more diversified economy,” insisted the official, to mark the differences with the crisis known as the ’Special Period in Times of Peace’ into which Cuba fell after the fall of the socialist camp and the abrupt elimination of the Soviet subsidies to the island’s economy in the 90s. In contrast to those years, Gil Fernandez says, this time “we are not going to have an abrupt drop in GDP, in fact we are proposing that the economy should maintain its growth trend this year.”

At the end of 2018, the authorities announced that the Island had a discreet growth of 1.2% of GDP that year and that an additional 1.5% was expected for 2019. In a study published in January of last year, the Inter-American Bank of Development (IDB) indicated that Cuba have not 35%, as had previously been reported, but a “little more than 50%” of its Gross Domestic Product in the 90s and that crisis still weighs on the economy.


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