The Cuban Government Acknowledges Having Used Diesel From the State Industry To Generate Electricity

Since April, Cuba has suffered a crisis due to a fuel deficit that has resulted mainly in shortages of service centers. (14ymedio)

14ymedio biggerEFE/14ymedio, Havana, 13 June 2023 — The Cuban Minister of Economy and Planning, Alejandro Gil, acknowledged that the diversion of diesel from industry to electricity generation has negatively affected the country’s productive activity.

Gil made these statements in his inaugural speech at the “Three Days of Productive Economics of Cuba,” a meeting of state and non-state economists and businessmen that takes place until Friday at the Chamber of Commerce in Havana.

“In recent months we have had to consume fuel for the generation of electricity, diesel mainly, due to the breakdowns we have had in the thermal plants. And that overconsumption of diesel affects the economy, because it leaves less fuel for use in productive activity,” he explained.

Since April, Cuba has been suffering from a fuel deficit crisis that has mainly resulted in shortages in gas stations and long lines of vehicles waiting to refuel, sometimes for several days.

The Cuban government initially indicated that it was from non-compliance by the fuel supplying countries and that the effects would last at least through April and May. The situation has not improved, and the government has not given any indication of when the situation could normalize.

Gil added in his speech that this situation has led his ministry to make difficult decisions in the face of fuel shortages.

“From time to time we call an industry and tell it to shut down. We have to stop the production of steel, the production of cement. Why? To try to help the population. And we always say when we pick up the phone that we are also affecting the population. We are less affected by the blackouts, but we are ceasing to produce,” he said.

The minister stressed that the country continues to consume “a lot of fossil fuel for the generation of electricity,” something that is “limiting economic growth.”

“That’s not how the economy can function. The economy depends on the basis of a stability of fuel and electricity generation,” he said.

Gil said that Cuba would not have enough foreign currency to support an economic growth of 4%. However, last December, the minister said that the Government expected the national economy to grow by 3% in 2023, compared to this year’s 2% and the 1.3% growth of 2022, so it would not yet be possible to recover the levels of 2019, prior to the COVID-19 pandemic. The official announced these figures when presenting the 2023 Economic Plan to the National Assembly of People’s Power.

The Minister of Economy focused his speech on Tuesday on the substitution of imports and the export of goods and services in order to generate foreign currency and to attract foreign investment, which he called a “strategic ally.”

He assured that Cuba is in a “productive recovery process” after “three years of a very complex economic situation.”

The Island is suffering its worst crisis in decades, with shortages of basic products (food, medicines and fuel), frequent blackouts, depreciation of the national currency, partial dollarization of the economy and strong inflation.

The minister said that the country is suffering from “very complicated inflation in recent years” and that this price increase is “one of the most visible problems that the economy has to face and solve.”

In his opinion, part of the price increase is due to Cuba’s strong dependence on the foreign market.

“We import more than 20 cents of the dollar to produce one peso of gross domestic product (GDP). We have a very high imported component. We put a lot of effort in the plans in 2016 and 2017, but we never fulfilled them. We ended up with a tendency to continue importing more to generate GDP, and that is one of the main limitations for economic growth,” he explained.

One dollar is exchanged for 24 Cuban pesos in the formal market (for state companies and legal entities), but in the informal one it has depreciated up to 200 pesos per US dollar.

Currently, he added, national supply is “very restricted” and imports do not meet demand, which has a certain consumption capacity.

“Today, a very high percent, I could say more than 90% of the products sold in our store network [that accepts payment only] in MLC (freely convertible currency) are imported. And in the national currency network, very little is sold, and a good part is imported,” he said.

To reactivate the economy, he advocated replacing imports of intermediate and final goods with “efficient” investment in national production – especially in industries with “idle capacities” – and thus generate added value and employment.

In this way, supply could be expanded, inflation could be addressed, and imports could be reduced. “All that can be done perfectly. We have the opportunity to solve it,” Gil said.

Translated by Regina Anavy


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