MercoPress. South Atlantic News Agency

Private sector will gradually replace Cuban government services beginning 2012

Raul Castro wants to cut bloated payrolls and inject efficiency to the economy

The Cuban government will begin contracting out some services to the private sector next year in a break from the state-dominated past aimed at helping small business develop, government insiders said on Monday.

They said food and cleaning, construction and some transportation services, all of which are currently done by government workers, were among those that would be contracted out in the future as Cuban leaders push ahead with more than 300 reforms to modernize the island's Soviet-style economy.

President Raúl Castro is encouraging private sector growth to create jobs for the one million employees he hopes to slash from bloated government payrolls over the next few years. His goal is to strengthen Cuban communism to assure its future.

More than 350,000 people are now self-employed, more than double the number of two years ago, although most are small operations based in homes.

Their ability to grow has been hindered partly by a lack of capital and access to government business, which is significant because the state controls most of the economy.

But new credit and banking regulations that take effect Dec. 20 will allow small businesses for the first time to obtain loans and, along with private farmers, to open commercial accounts, a prerequisite for doing business with the state.

The measures also lift a 100 peso- (roughly 4 dollars) cap on business between state enterprises and private individuals.