Analysis of What Cuba’s Minister of Economy and Planning Said to Cuba’s Legislature  

A previous post covered the July 8th speeches to Cuba’s legislature (the National Assembly of People’s Power) by President Raúl Castro and Minister of Economy and Planning, Marino Murillo. However, that post was unable to dissect the English translation of the latter. Now Granma, Cuba’s Communist Party newspaper, has provided the following analysis of Murillo’ speech.[1]

In the last half of 2016, the Cuban government will be implementing measures that are “intended to optimize the country’s finances and emphasize the need for rational use of resources and efficiency, in order to reduce expenses and take advantage of untapped opportunities for savings.”

These measures include “plans to reduce liquid operations, which include adjustments by entities which have hard currency self-financing systems in place. Others involve suspending the assumption of short and medium term credits, as well as a cut, of approximately 28%, in planned energy consumption in the non-residential sector.”

The reductions of these expenses will mean “elimination of income” for some, but “other sectors with untapped opportunities are called upon to make an extra contribution to the economy. Tourism, for example, must generate some 25 million pesos more than initially planned.”

“In terms of energy consumption, fuel cutbacks of some 369,000 tons . . . are needed, while use of electrical energy must be reduced by 786 gigawatts. . . . However, the residential sector, which represents 60% of the country’s electricity consumption, will not be impacted.”

“Economic activities, such as tourism, which make a strategic contribution to the national economy – and consequently the country as a whole – will receive their projected supply of electricity, as will others capable of assuring export income or replacing imports with their products. Nor will the importing and production of food, or retail sales, be affected.”

“Also prioritized is the production of construction materials and indispensable inputs for agriculture, while maintaining attention to the country’s internal financial equilibrium.”

The steps to be taken in the last half of this year “are intended to address limitations with rationality, without changing the basic plan, and respond to the energy situation with precisely focused adjustments.”

There will be “strict adherence to the principle that funds allocated for salaries must be backed by production, in accordance with guiding benchmarks. Avoiding a negative impact on the average salary-productivity ratio is key to advancing along the course charted.”

“Leading the list of imperatives is stopping the importing of containers full of items that can be produced domestically, since reducing imports is crucial to balancing the budget equation.”

Encouragement was found in the increase in the “volume of milk collected by the state wholesale system . . ., implying a reduction in expenses associated with importing powdered milk, initially projected at 53,000 tons. Since dairy farmers have surpassed plans by more than seven million liters and the industry by 32 million, projected imports can be reduced.”

Another premise for these measures is “reducing expenses in hard currency to a minimum, maintaining only the indispensable associated with key economic activities.”

Also important is “avoiding the addition of inflationary pressures. Adequate levels of retail sales will be assured, and the necessity of salary expenses having productive backing is reiterated.”

“Other results thus far this year indicate the need to reprogram levels of freight transportation and, therefore, scheduled investments. It is now projected, however, that 17% of the funds originally planned for investment will not be spent. The 2016 total was estimated at 6.5 billion pesos, placing the transport sector among those with the largest investment plans in the country. Key development projects to a tune of 4.5 billion pesos will be guaranteed. The prioritized group of sectors in which strategic investments will be fully funded includes tourism, energy, the oil industry, and agricultural programs.”

The “average salary in state enterprises will be slightly lower than projected, with a reduction in the wage expenses-gross value added index.”

“In reference to the food supply, . . . planned imports of foodstuffs are assured. Fortunately, a decline in prices on the international market for some [food] products has given the state some relief in terms of funds allocated for food imports, allowing for savings of approximately 193 million U.S. dollars. Nevertheless, domestic shortfalls in projected production of food items have led to unplanned imports, costing some 50 million additional dollars.”

Recent steps have been “taken to increase the buying power of the Cuban peso, adding that efforts to stabilize their supply in retail outlets continue, to make the impact of price reductions sustainable over time. Lower prices for chicken, rice, cooking oil, powdered milk, and chickpeas have led to [recent] increased sales.”

“Throughout the report, a renewed call for increased productivity and efficiency, on the part of all, was made clear. Using resources rationally at all times, in all places, is now imperative.”

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[1] Delgado, Morales & Rodriguez, Efficiency on the economic agenda, Granma (July 14, 2016). On July 13, only five days after this speech, Murillo was replaced as Minister of Economy and Planning by Ricardo Cabrisas Ruiz, Vice President of Council of Ministers. According to the State Council, Murillo, in his capacity as Deputy Prime Minister and Head of the Permanent Commission for Implementation and Development, will now focus on updating the Cuban economic and social model, adopted by the 6th and the 7th Party congresses. However, no reasons were provided for this change. Official Note, Granma (July 13, 2016), ; Assoc. Press, Cuba Shuffles Economic Leadership Amid Fiscal Struggles, N.Y. Times (July 13, 2016).

 

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dwkcommentaries

As a retired lawyer and adjunct law professor, Duane W. Krohnke has developed strong interests in U.S. and international law, politics and history. He also is a Christian and an active member of Minneapolis’ Westminster Presbyterian Church. His blog draws from these and other interests. He delights in the writing freedom of blogging that does not follow a preordained logical structure. The ex post facto logical organization of the posts and comments is set forth in the continually being revised “List of Posts and Comments–Topical” in the Pages section on the right side of the blog.

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