The Cuban Economy in 2013 and Perspectives for 2014 / Miriam Leiva

The Council of Ministers met on December 19-20 in conjunction with the National Assembly of People’s Power, to hear information about the fulfillment of the 2013 Economic Plan, approve the Plan for 2014, and the draft State Budget for the coming year, and to release the report about the compliance with the Party’s Political, Economic and Social Guidelines and the Revolution, according to what was reported in the Cuban media.

With regards to 2013, Adel Yzquierdo, vice president of the Council of Ministers, reported only that the Gross Domestic Product grew 2.7%, less than the 3.6% forecast, mainly due to the reduction in revenue from freely convertible currency, manufacturing and construction, but said that most of these activities showed increases compared to 2012. He did not offer data about the results of any sector, which prevents analysis of the behavior of the economy.

However, he highlighted the decline in hard currency revenue, it has already been reported that remittances primarily from the United States have increased and total over 2 billion dollars, plus those from visiting Cubans, Cuban-Americans and Americans, as well as the new revenue from sending around 7,000 doctors to Brazil and other countries, along with those in Venezuela, are the principal export and source of foreign exchange revenues. The hard currency coming from Caracas has probably decreased, among other reasons because of problems with oil and derivatives which Havana re-exports to the world market.

As for 2014, GDP growth is projected to be 2.2%, “beginning with the strengthening of internal reserves from the efficiency of the economy and the dedication of resources to those productive activities that generate exports and investment financing,” but he notes the expectation that sugar and nickel prices will fall.

In the first case, the sugar industry has been in slight recovery over the past two years, and in 2013-14 the harvest is expected to grow 17.5% compared to the last one, but it will be only 1.8 million tons, and of these barely a million for export. It is striking that the manufacturing sector is not prioritized to compensate and increase exports. Despite an almost 50.0% reduction in nickel since 1989, a slight reduction is projected for 2014, citing financial limitations. However, at that meeting, President Raul Castro stressed the need to diversify production for domestic consumption and export.

In addition, an increase of 7% in the agricultural sector was announced. Clearly the market remains undersupplied with prices high, evidence that the policies followed to date have not provided incentives to the farmers, and essential foods must be imported from the world market at high prices.

The plan projects a increase of 9.3% in trade, 8.8% increase in hotels and restaurants, and aims to increase tourism which, in 2013, did not grow as expected.

Difficulties in national passenger transportation continue, as evidenced by the “reorganization” of the activity through cooperatives created in Havana, Artemisa and Mayabeque, generated by the leasing of taxis, as well as the simultaneous announcement of the elimination of the restrictions on nationals and foreigners selling their cars, and the retail sale of new and second hand motorcycles, cars, vans and microbuses, with prices similar to those of the private market, which supercedes Decree 292 of 2011. In addition, state sales of bicycles, including electric ones, are prioritized, with reasonable prices. However, they continue to harass taxis, biketaxis and animal-powered carts, which are important means of transport for Cubans.

With regards to social services, the plan projects maintaining levels similar to the last two years, “under the premise of protecting education, public health and social assistance, based on achieve greater efficiency and effectiveness,” although there no mention of increasing the infinitesimal pensions.

Vicepresident Murillo also referred to the intention to continue growing the exporting of health care to guarantee the sustainability of the system and contribute to the national economy and support the national economy, along with the increasing medical attention in Cuba, academic and teaching services, and others associated with optical, pharmaceutical products and natural and traditional medicine and scientific events. Surely, to achieve this they won’t use the impoverished facilities lacking medical staff, all over the country.

In addition, with regards to foreign trade he addressed the promotion of companies and partnerships that foster better positioning of Cuba’s interests in foreign markets.

Notably, Murillo announced that in the next two years they will undertake more technical and complex tasks with regards to economic policy and emphasize creating confidence among Cubans in the process of monetary unification, while warning that doing away with the dual currency will not solve the country’s problems, it will require broad measures across the entire economy, focused on increasing production and productivity, according to what was heard on TV.

In this regard, during his speech at the closing session of the National Assembly on 21 December, President Raul Castro said that the timetable for monetary unification and exchange rate unification is intended to create conditions for improving efficiency, properly measuring economic events, and stimulating the sectors that generate export earnings and replacing imports. He also said that, by itself it does not constitute a magic solution, but it will contribute in a decisive manner to improving the workings of the economy and the building of a prosperous and sustainable socialism, less egalitarian and more fair, which ultimately will foster greater benefits for all Cubans.” But he did not clarify how or when that will be achieved.

Miriam Leiva

27 December 2013, From Cubencuentro