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Wednesday, May 27, 2009

Cuba announces new austerity plan

Cuba announces new austerity plan
By Michael Voss
BBC News, Havana

Cuba has announced it will introduce an austerity programme in June to
try to offset the impact of the international financial crisis and
reduce energy use.

Unless energy use is reduced over the summer there could be blackouts,
the authorities warn.

Details of the restrictions have yet to be announced but could include
limiting the use of air conditioning at work and home, and shorter
working hours.

Until recently the global recession has not been felt by most Cubans.

There have been no mass redundancies in this state-run economy where
most workers have jobs for life.

But life is about to get harder.

Prices of Cuba's major export, nickel, have slumped, tourism revenues
are down while last year's hurricane caused $10bn (£6.25bn) worth of
damage and the US trade embargo continues to bite.

Liquidity problem

The result is a serious liquidity problem.

The government is running out of money to pay for imports.

Shortages are starting to appear in the shops of items ranging from milk
to toothpaste and babies' nappies.

Cuba used 40,000 more tons of fuel to produce electricity in the first
three months of 2009 because of increased consumption, according to
figures published in the state-run newspaper Granma.

According to Cuba's Minister of Economy and Planning, Marino Murillo,
the predicted 6% growth in 2009 is now expected to fall to barely 2%.

Many foreign firms operating in Cuba are currently unable to send money
abroad or take cash out from their corporate accounts.

http://news.bbc.co.uk/2/hi/americas/8069877.stm

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