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Cuba: 2008 worst year since collapse of the Soviet Union

Monday, December 29th 2008 - 20:00 UTC
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Cuba says it has suffered one of the most difficult financial years since the collapse of the Soviet Union. Economy minister Jose Luis Rodriguez said the Cuban economy had grown by 4.3% in the past year, falling short of the 8% forecast by the government.

President Raul Castro called for austerity measures including cutbacks in official travel and bonuses.

Cuba was hit by hurricanes Gustav, Ike and Paloma this year, with estimated losses of nearly 10 billion US dollars. The cost of food imports has also risen by more than 8 billion on the previous year, while the price of nickel, one of the country's main exports plunged 40%. The bright spot is that tourism income this year increased by 10%. Mr Rodriguez said the past year had been one of the most difficult since the so-called "special period" began - the term used for the economic crisis caused by the 1991 collapse of the Soviet Union, which heavily subsidised Cuba. The president of the Cuban parliament's economic commission, Osvaldo Martinez, blamed the lower growth rate on factors outside the country's control, particularly the 46 year trade embargo imposed by Washington. "Economic growth of 4.3% is less than the 8% foreseen in the plan, and this is explicable, given the profound devastation caused by the hurricanes, the economic war waged against us and the noticeable increase in the price of food and fuel during most of the year," he said. Cuba calculates its Gross Domestic Product by including state spending on health care, education and food rationing. This means the figure reflects public spending, not just economic activity, as it does elsewhere in the world. Mr Rodriguez predicted that the Cuban economy would grow by 6% in 2009. President Raul Castro, who took over from his ailing brother Fidel in February, told the National Assembly "the accounts don't square up". "We have to be realistic and adjust our dreams to real possibilities," he said. "That means complying with the socialist principle each receives according to his work." Mr Castro said the government would cut government trips abroad by 50% and end programs that rewarded workers, business leaders and officials with free holidays at a cost to the government of 60 million USD a year.

Categories: Economy, Latin America.

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