Uncertainty surrounds Cuban economic growth forecast for second half of 2017

28 July 2017

Cuba’s President, Raul Castro, has warned that while the country experienced a 1.1% growth in Gross Domestic Product (GDP) in the first half of 2017, it anticipated “possible difficulties in the supply of fuels from Venezuela” during the remainder of this year. President Castro made the comments during the closing session of the
mid-year meeting of the country’s National Assembly on July 14. He said that “financial tensions and challenges” could complicate the performance of the national economy.

President Castro was able to confirm that advances had been made in prioritised national investment programmes in infrastructure projects which, he argued, would lay the groundwork for future national development. He added that domestic monetary equilibrium had also improved, with lower than expected inflation and a reduced budget deficit. He noted, however, that the country’s external debt remained a problem.

President Castro said that while Government had restructured its external debt with its main creditors, it had not yet been able to catch up on current payments to suppliers. He stated that addressing the problems would require the continuation of measures to protect export earnings, food production, and services to the population. He added that it would be necessary to eliminate all non-essential expenses, and to ensure that resources were used in a targeted way that would support approved priorities.

Cuba’s Minister of the Economy and Planning, Vice President Ricardo Cabrisas, had spoken to the National Assembly about the state of the economy in greater detail the previous day. He warned that “the effort which must be made in the second half of the year is enormous”.

Mr Cabrisas told delegates that Cuba’s economic expansion rate of 1.1% during the first six months of 2017 did not in any way mean that the country’s economic problems had been resolved. Observing that the high season for tourism had ended and the sugar harvest had been completed, he suggested that achieving the country’s planned outcome for the year would require “work to guarantee income from exports and the rational use of fuel; issues which are still pending tasks.”

In his remarks, Mr Cabrisas said export revenues to the end of June fell short of expectations by US$417m, and that the planned import bill of US$1.55bn would not be met “due to difficulties in using credits, limits in the allocation of liquidity”, and “debts owed by letters of overdue and unpaid credits, as well as shortcomings in the contracting process.” He also said that the country had managed to obtain financing for just 40.8% of imports, as suppliers had become reluctant to offer fresh credits.

In a separate commentary published in Cuba Debate, José Luis Rodríguez, a former Minister of Finance and a widely respected economist who acts as an advisor to Cuba’s World Economic Research Centre, suggested that the country was likely to struggle to meet its planned targets for the year.

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Photo Credit: Presidencia de la Republica Mexicana, ‘Visita de Estado del Presidente de República de Cuba, Raúl Castro’, http://bit.ly/2od1AEi, Flickr (Cropped)