Economy of Cuba

Economy of Cuba

The disorganization and then the collapse of the decades-old system of foreign economic relations with the USSR and the countries of Eastern Europe led to the fact that at the beginning. 1990s Cuba’s economy was in a protracted crisis. Between 1989 and 1993, Cuba’s GDP shrank by 34.8%. The decline in the country’s purchasing power from $8.1 billion in 1989 (the last “normal” year for the national economy) to $1.7 billion in 1993 indicated that its economy was 4/5 paralyzed. The government was forced to put into effect a program of emergency measures, which provided for a wide opening of the economy to foreign capital, strict centralized control over the spending of financial resources, a shift in emphasis in favor of the development of industries working to meet urgent domestic demand (food industry, oil production) or for export.

Thanks to the “New Deal”, Cuba in 1994 managed to reverse the declining trend in its economic development – the country’s GDP for the first time in recent years grew by 0.7%. The trend towards the resumption of economic activity that emerged in that year, although it intensified later, did not acquire a sustainable character: Cuban GDP growth (%): 1995 – 2.5, 1996 – 7.8, 1997 – 2.5, 1998 – 1, 2, 1999 – 6.2, 2000 – 5.3, 2001 – 2.5, 2002 – 1.1. Sharp fluctuations in growth rates over the years are mainly due to changes in the world market conditions, as well as force majeure factors (hurricanes, droughts).

According to businesscarriers, the GDP in 2002 is estimated at 27.6 billion pesos. Based on the official (obviously overvalued) exchange rate of the peso against the dollar (1:1), then GDP per capita in 2002 was approximately $ 2,456. However, this figure does not reflect the actual state of affairs, since the peso is an inconvertible currency, and its real purchasing power is expressed by the ratio of 26 pesos to 1 dollar.

The number of people employed in the national economy is 4.3 million people, of which 78% are in the public sector. Agriculture accounts for 24%, industry 25% and services 51% of all employed (1999). Unemployment 4.1% (2001).

According to official data, there is no inflation in the country. According to the CIA, inflation in 2002 was 7.1%.

Sectoral structure of GDP: agriculture – 8%, industry – 35%, services – 58% (2002).

The development of individual branches of the national economy is uneven. In industry, the priority sectors are the extractive industries – oil and the production of nickel-containing concentrates. In 2002, Cuba produced a total of 4.1 million tons of oil, which covers 92% of the country’s need for electricity generation. Cuba’s current (2003) energy demand is 100,000 barrels. per day, 53 thousand of which comes on preferential terms from Venezuela.

The extraction and processing of nickel ores remains a strategic sector of the Cuban economy, in the development of which more than $400 million has been invested over the past 5 years. In 2000, nickel-containing concentrate became the country’s main export product, the proceeds from which exceeded the income from sugar supplies. A year later, Cuba strengthened its position in the world economy as the 5th largest nickel producer (76.5 thousand tons). The country has 37% of the world’s reserves of this metal and plans to increase its production to 100 thousand tons in the near future.

At the same time, Cuba does not yet have plants for processing the concentrate into finished products (Canada does this for it). The nickel industry is too energy-intensive for their construction to be planned in the near future in the conditions of an underdeveloped energy sector on the island. Electricity generation in 2001 was 15.3 billion kWh.

The backbone of the Cuban economy is still recognized as the sugar industry, which, in terms of income in freely convertible currency, ranks 3rd after tourism and the nickel industry.

The collapse of the former supply chain established within the framework of the Council for Mutual Economic Assistance and the unfavorable world market conditions caused a deep recession in the industry: the volume of raw sugar production decreased compared to the 2nd half. 1980s 2 times, varying within 3.2-4.0 million tons (in 2002 – 3.4 million tons).

Since May 2001, the government has been restructuring the industry. The main task is to significantly increase its profitability. As part of the relevant program, 71 plants out of 156 were announced to be closed or converted, and the remaining ones to be upgraded. The production potential of sugar refineries is planned to be maintained at the level of 4 million tons of products per year (0.7 million tons for domestic consumption and 3.3 million for export). OK. 40% of the area occupied by sugarcane will be allocated for other crops, for the development of livestock and the expansion of forest resources.

With the help of foreign loans, the tobacco industry is being restored, primarily the production of cigars, which was greatly reduced in the beginning. 1990s In 2002, their sales reached $240 million.

Of the science-intensive industries, biotechnology, the pharmaceutical industry and medical instrumentation enjoy the greatest attention. Of the 804 medicines on the national list, the pharmaceutical industry produces 571 (71%, 2001).

On horseback In 1997, the land fund of Cuba was 10,972.2 thousand hectares, incl. agricultural land – 6686.7 thousand hectares (60.9%), of which cultivated land – 3701.4 thousand hectares (33.7%), natural pastures – 2222.8 thousand hectares (20.3%), unused land — 762.5 thousand hectares (6.9%); non-agricultural land – 4285.5 thousand hectares (39.1%), incl. forests – 2924.9 thousand hectares (26.6%). Irrigated areas are less than 1 thousand km2.

Out of 6,686.7 thousand hectares of agricultural land, 2,234.5 thousand hectares (33.4%) are in the public sector, 4,452.2 thousand hectares (66.6%) are in the non-state sector, incl. in the cooperative – 4149.9 thousand hectares and at the disposal of individual peasants – 236.2 thousand hectares.

Production of certain types of agricultural products (2001, thousand tons): vegetables and root crops – 2125.2, rice – 590.6, corn – 306.7, beans – 105.6, citrus fruits – 893.8. Deliveries for slaughter (thousand tons): cattle – 143.9, small cattle – 17.3, poultry – 71.0. 1.5 billion eggs were produced.

The public sector accounts for 72.3% of the production of vegetables and root crops, 34.5% of rice, 21.3% of corn, 15.6% of beans, 50.5% of citrus fruits, 93.7% of beef, 27. 9% pork, 18.1% small ruminants, 35.0% poultry, 19.3% milk and 78.8% eggs (1998).

Cuba has a relatively dense transport network. The length of railways is 12.0 thousand km (2000, estimate), incl. public railways – 4.8 thousand km (of which 147 km are electrified) and the so-called. sugar lines – 7.2 thousand km (2000, estimate).

The length of highways is 60.9 thousand km, incl. with a hard surface – 29.8 thousand km.

In 2001, 678.9 million passengers were transported by specialized transport institutions of Cuba, of which 15.0 million were transported by rail, 657.6 million by road (excluding the transportation of tourists) and 1.3 million by air. Cargo transportation amounted to 57.7 million tons, of which 5.4 million tons by rail, 45.4 by road, 9.9 by sea and 0.01 million tons by air.

The merchant fleet of Cuba has 14 ships with a displacement of st. 1 thousand tons. The total carrying capacity is 63.4 thousand tons (2002, estimate). The fleet includes 9 dry cargo ships (including 3 bulk carriers), 2 tankers and 3 refrigerators. The most important ports are: Havana, Santiago de Cuba, Ma-tansas, Cienfuegos, Mariel, Nuevitas, Manzan-llo. There are 32 ports in total.

There are 172 airports in the country, of which 78 have a concrete runway (2002).

In 2001, it was sent (million pieces): letters – 15.6, telegrams – 5.5. The total distribution of printed publications amounted to 282.9 million units, of which 264.5 million were newspapers. 731.8 thousand telephone lines were in operation. The number of telephone numbers per 100 inhabitants is 5 (2001). There were 3.9 million radios and 2.6 million television sets in the country (1997). Internet users – 120 thousand (2002).

The most dynamic area of the Cuban economy in recent years is tourism. In 2002, this industry, although it experienced a 5% decline, brought in $2.0 billion to the treasury. Cuba was visited by 1686.7 thousand tourists, 40% of them from Europe. To receive foreign tourists, the country has 40,000 hotel rooms and 11 international airports. The sector employs 100 thousand people. The country is taking active measures to encourage cruise ship visits to its ports and ensure that St. 3 million people In 2002, 70 cruise ships visited Cuba with 45,000 passengers on board.

Cuba has a two-tier banking system, which includes 8 commercial banks, in the field of activity of which is the provision of financial intermediation services, and the central bank, which regulates and controls their work. All Cuban banks are state-owned, their shares are owned by the central bank, established in 1997. There are also 12 representative offices of foreign banks in the country. The only bank that operates abroad on the basis of Cuban capital is Havana International Ltd. There are also representative offices of the National Bank of Cuba, founded in 1950. It retained its commercial status and inherited the country’s external debt. Among the functions of the central bank: the issuance of banknotes, the regulation of the money supply in circulation and loans, the development of monetary policy, etc.

The country has a trimonetary monetary system: pesos, dollars and convertible pesos (the latter was put into circulation in 1994, equated to the US dollar and is designed to limit the circulation of the American currency in the national economy).

In 2001, the revenue side of the budget was expressed in the figure of 14,774 million pesos, the expenditure – 15,533 million pesos. The state budget deficit (759 million pesos) remained within the planned limits (2.8% of GDP), which generally confirms the correctness of the government’s tax policy.

Starting from the 2nd floor. 1990s The social situation in the country has somewhat stabilized. According to official sources, compared with 1994, calorie intake has increased by 33% (up to 2585 kcal per day), and proteins – by 44% (up to 68 g per day). In nominal prices, the average monthly wage increased from 185 to 249 pesos (taking into account the fall in the exchange rate of the peso after September 11, 2001, it actually did not change and is less than 10 dollars). The extremely low level of official income results in a constant decrease in the population’s motivation to work.

Although open unemployment has been gradually decreasing since 1995, underemployment has become widespread. By international standards, the majority of the population lives below the poverty line. At the same time, the social differentiation of the population is increasing. Among those with higher purchasing power are citizens who own foreign currency. St. 50% of the population receive remittances from the United States, the official amount of which is from 800 to 1100 million dollars a year.

Currently, 95% of the country’s total housing stock is electrified. In 2003, the gasification of the largest cities, Havana and Sant’yago de Cuba, will be completed.

In 2000, there were 170 residents per general practitioner, and 1,129 residents per 1 dentist. Number of students per 1 teacher: primary school – 12.0, secondary school – 11.5 (2000). The number of students per teacher is 5.6 (2000).

Although the Human Development Index in Cuba is 0.795 (2000), the standard of living of its population is still lower than in pre-crisis 1989.

According to official estimates, in 2001 Cuba’s foreign trade turnover was determined at 6443.3 million dollars. A year later, it fell by 13.9%.

The country still spends more foreign currency on imports of necessary goods than it receives from exports, which makes the state’s balance of payments very tense. The trade balance deficit ($3,120.3 million, or 11.4% of GDP) in 2001 turned out to be almost 1.9 times greater than the volume of exports. Against the backdrop of GDP growth, since 1993 there has been a constant deterioration in the balance of payments.

In 2001, exports amounted to 1661.5 million dollars. The commodity structure of exports (%): sugar – 30.1, nickel – 25.6, tobacco products – 14.5, seafood – 4.4.

Imports increased in 2001 to 4,781.8 million dollars. The main purchases fall on (%): machinery and equipment – 23.6, energy carriers – 23.5, food – 14.4, chemicals – 8.8.

The main trading partners are (2001,%): in exports – the Russian Federation (19.4), Canada (16.6), Spain (8.9), Germany (7.2), the Netherlands (7.0); in imports – Venezuela (18.6), Spain (15.4), China (9.2), Mexico (6.2), Italy (6.0).

The volume of trade with the Russian Federation is 322.5 million dollars, incl. export 288.0, import 34.5.

In November 2001, for the first time, Havana took advantage of an amendment passed by the US Congress to allow US companies to export food to Cuba. However, the island is forced to pay for all contracts in advance and in cash, unable to borrow from US banks. In 2002, Cuba purchased food from the United States for a total of $255 million.

A serious problem of the balance of payments remains the impossibility of carrying out international settlements in dollars associated with the ongoing embargo by the United States. Having lost only in 1998 due to the need for a constant exchange of currencies in conditions of fluctuating exchange rates, 260 million dollars, the National Bank of Cuba decided on the mandatory use of the euro as a monetary unit from July 1999 in transactions with 11 member countries of the European Monetary Union.

In 1987, Cuba unilaterally stopped servicing its external debt, the amount of which is at stake. 2001 was estimated at 10,893.0 million dollars (81.0% – the principal amount of the debt, 19.0% – obligations to service it). This amount does not include debts to former socialist countries, incl. THE USSR.

To stimulate the flow of foreign capital into Cuba, on September 5, 1995, a new Foreign Investment Law was adopted in the country, and on June 3, 1996, the Law on Free Zones and Industrial Parks, which contains legal norms governing their creation and operation.

All sectors of the national economy are open to foreign investors, with the exception of health care, education and national security (the ban does not apply to the enterprise system belonging to the Revolutionary Armed Forces).

The total amount of foreign direct investment approved for the con. 2002, amounted to 5930 million dollars. The number of economic associations with the participation of foreign capital from 46 countries (among which Spain, Canada, Italy, Great Britain and France stand out) reached 402. 32 different sectors of the Cuban economy are in the sphere of interests of foreign investors. According to the Cuban press, more than 650 projects are at various stages of negotiations, approx. 1/2 of them belong to EU countries.

As of May 2002, Cuba has signed mutual investment promotion and protection agreements with 60 countries. Expanding the legal framework for investments, it is negotiating with a number of states on the preparation of agreements on the avoidance of double taxation. To con. 2000 such agreements were signed 4 (with Barbados, Spain, Italy and Russia).

Currently, there are 3 free zones operating on the island, located in the Havana region. More than 240 foreign operators are registered in them, 2/3 of which operate in the commercial sphere, the rest – in production and services.

Economy of Cuba