MercoPress. South Atlantic News Agency

Government tells Cubans: austerity or blackouts

The Cuban government reduced from 6 to 2% the projected growth of the economy for 2009. The announcement was made by Cabinet vice president and Economy Minister Marino Murillo during a meeting at which “exceptional measures” were announced starting June first to reduce energy consumption, the official daily Juventud Rebelde said Saturday.

“The global downturn affects the country’s export sectors and diminishes revenues from tourism, which leads to an estimated GDP performance above 2% but not the 6% we previously thought,” Murillo said.

Last December the Cuban Parliament approved an economic plan for 2009 with a 6% goal for growth, after the island’s economy expanded 4.3% in 2008.

According to figures from the United Nations Economic Commission for Latin America and the Caribbean, Cepal, released last April, Cuba will have positive growth in 2009 equal or superior to 3%, as will Panama, Peru and Bolivia.

This week the island’s authorities and official media launched a crusade to reduce electricity consumption, given the country’s grave economic and financial crisis.

Murillo said that the state sector, which consumes more than half the electricity on the island, will have to reduce consumption by 12%, because the expenditure above and beyond what was planned has already cost some 90 million US dollars.

If that goal is not achieved, the economy minister announced that the government will have to resort to blackouts because the country cannot use more fuel for generating electricity.

Official news media have described as “very serious” the economic crisis and the lack of liquidity, to such a degree that the daily Granma, official organ of the ruling Communist Party, announced that the situation is one of “save or die,” a parody of ex-President Fidel Castro’s slogan “homeland or death.”

The deteriorating economic situation got worse over the last year due to repercussions from the world financial crisis, massive losses caused by three hurricanes in 2008, the drop in exports prices (particularly nickel) and the increasing cost of imported products.

Blackouts and brownouts were routine during the economic crisis of 1990 following the collapse of the Soviet Union which supported the Cuban economy. Juventud Rebelde recalls that at the time food rations were drastically cut, industries paralyzed because of lack of energy and cars were exchanged for bicycles.

Foreign companies operating in Cuba are currently complaining that the government is not honouring debts and they also have difficulties to transfer profits. Some government banks have been telling their clients they have simply run out of hard currency.