The government of Cuba paid 5.299 billion dollars in 2016 to fulfill the commitments of restructuring of its external debt, in the middle of an economic crisis that does not seem to be declining this year.
Despite the increase in tourism – which reported a 15 percent increase in revenues to about $ 1.2 billion in the first half – the Cuban economy will remain in the red this year, overwhelmed by external debt payments and the crisis In Venezuela.
Although the Cuban government and the Economic Commission for Latin America and the Caribbean (ECLAC), which uses the same official figures, predicted that the Gross Domestic Product will grow by two percent this year, economist Pavel Vidal forecasts a decrease between -1 , 4 and -0.3 percent, according to the latest report of the Cuba Standard Economic Trend Index (CSETI).
The reform undertaken by President Raul Castro “had promised GDP growth of 5.1%, then adjusted to 4.4%, but the real growth rate from 2008 to 2016 was only 2.3%. The end could not have been more daunting, with a recession in 2016 (-0.9%) and very uncertain projections for 2017 in terms of a re-emergence of the crisis and what could happen with the Trump administration, “says report.
Vidal, professor in Colombia and ex economist of the Central Bank of Cuba, is the creator of an economic magazine which is the Cuban Standard of the CSETI, an index to measure the Cuban economy that predicted its decline in 2016.
According to Vidal’s estimates, the Cuban island government could have stopped paying nearly $800 million to suppliers and short-term debt commitments last year, but according to former Cuban economy minister Jose Luis Rodriguez, The government paid the annual amount agreed upon for restructuring of its external debt with several members of the Paris Club and signed other independent agreements with Russia, Germany and Japan.
“… to achieve significant volumes of foreign investment and new loans in more favorable conditions, last year we planned to pay about 5.299 million dollars, which – according to information provided in the ANPP [National Assembly of People’s Power] – was fulfilled, although a part of the short-term commercial credits could not be paid in time, “explained Rodríguez.
In his speech at the end of the year, President Raúl Castro affirmed “strict compliance with the obligations contracted as a result of the reorganization of the Cuban foreign debt,” without giving figures. He also said that it had not been possible “to overcome the transitional situation we are experiencing in the arrears of current payments to suppliers,” something that had already been announced by the government in the summer.
The amount of payment of foreign debt would far exceed the income from tourism, which economist Carmelo Mesa Lago places near $ 3 billion this year, as the official figures are still unknown. The government also does not give official figures on remittances sent by Cubans abroad to their families, another important source of income and that the Havana Consulting Group estimates another is yet another $ 3 billion.
But Venezuela’s oil delivery dropped significantly to 55,000 barrels per day in 2016 according to Rodriguez-from a peak of 120,000 at its best. Other experts in the United States estimate that the figure may be slightly higher, of 70 thousand barrels per day. Likewise, the Cuban economist Omar Everleny Perez had estimated that $ 1.3 billion Cuba stopped paying for export of medical and other services to Venezuela.
“The eternal problem of Cuba is that it is a parasitic country, first parasite of the Soviet Union and after Venezuela,” opines Mesa Lago. “They have failed in 58 years of government to develop an economic structure that is capable of producing enough to import and develop.”
After years of cuts in so-called “social spending” such as health, education and social security, the Cuban government hopes to lessen the crisis with increased public spending, which will create a fiscal deficit equivalent to 12 percent of GDP and 48 Percent of the value of family savings accounts, an amount “exaggerated” and “generates doubts about its sustainability,” Vidal said in an analysis published in IPS.