Cuba: more cuts in public spending announced

[Hannah Bell]

In a message to the Cuban nation on the 56th anniversary of the assault on the Moncada Barracks, the beginning of the military campaign that culminated in the 1959 Cuban Revolution, President Raúl Castro announced a second major cut in public spending.

In his July 26 speech, Castro said the new measure was in response to what he called a “significant reduction” in foreign investment. His remarks signaled that the Cuban economy is undergoing its worst downturn since the so-called “special period,” the protracted economic crisis that followed the collapse of the Soviet Union and the end of subsidized trade with the Soviet bloc.

Speaking in the eastern city of Holguín, Castro warned Cubans that conditions will worsen. “Let us not entertain any illusions,” he said. “As we commemorate this half-century of victories, it is time to reflect on the future...the coming years will not be easier. This is the truth. I am not saying this to scare anyone.”

The government reduced its spending 6 percent in the first trimester of this year, and last week announced a second cut. In his speech, the president recognized that the liquidity crisis persisted in the nation’s economy, and cited a “significant reduction” in exports and “new restrictions in access to sources of external financing.”

There has been no information released to the public about the balance of payments in 2008, but it is likely that it is in the red due to the increase in imports, principally of petroleum and food, as well as a fall in income from the sale of nickel and reduced levels of tourism.

In the wake of Castro’s speech, Cuba’s leading economic commentator suggested that the government is preparing to extend its turn towards privately run agriculture to other sectors of the economy.

“The leasing of state lands, which in the end is the placing of state property in the hands of producers, could be applied in other sectors, for example food services, retail trade, and other areas where really it is impossible, given the diversity and breadth, for the state to administer directly,” said the commentator, Ariel Terrero, in an appearance Tuesday on state-run television. Reuters news agency reported that his remarks echoed proposals in a recent report prepared by Cuba’s Economic and Planning ministry.



http://www.wsws.org/articles/2009/jul2009/cuba-j30.shtml