Austerity & Fewer Subsidies in 2009


Sunrise along Havana’s Malecon Seawall

HAVANA TIMES, December 29. – Cuban President Raul Castro said Saturday that to cope with the current financial situation the country must “act with realism and adjust our dreams to the real possibilities.” He called for austerity measures and a cut in heavily subsidized products.

In addressing the country’s legislature, Mr. Castro began by giving a run down of the adverse economic circumstances facing the country after being hit by three major hurricanes in 2008, which caused US $10 billion in damage to housing, electricity and other infrastructure and agriculture.

Mr. Castro also mentioned the sharp US $907 million increase paid over the year for foodstuff imports and the dramatic drop in Cuban export revenues for leading products like nickel which fell 41 percent in 2008. On the bright side he noted that tourism was holding its own with over 2.3 million visitors.

The president said that the many heavily subsidized services and products provided by the government should be limited “to vital areas like education, health care and social security and assistance.”

To be able to purchase products or services with a reduced or no subsidy, the Cuban president said that progress must be gradually made towards “giving the salary its real worth.” He has previously acknowledged the low across-the-board buying power of the country’s wages, but made it clear that any increase must be backed by a corresponding increase in savings and production.

He also called for government belt-tightening measures: “Our primary duty is to adjust our foreign currency spending to the amounts we can bring in.” He noted: “This is not only an imperative necessity but also our basic duty to future generations. It would not be ethical to increase the non productive expenditures at the expense of contracting debts to be paid for by our children and grandchildren.”

One specific austerity measure announced was to reduce by half the expenses budgeted for trips abroad by officials and business executives. “The objective is not to diminish necessary tasks or negotiations but to carry them out in a more rational manner,” said Raul Castro.

In explaining to the population that Cuba is not exempt from the global financial crunch he said, “No Nobel Laureate in Economics, no school of economic thought or international body can ascertain how long and how far… this crisis that first broke out in the United States will go.”

President Castro warned that “next year will be one of great uncertainty in world economy and we should be prepared to take up that serious challenge which has been affecting us considerably.”