Wednesday, July 22, 2009

Foreign exchange crunch continues [Updated]

An economy ministry report forecasts that Cuba’s imports will fall 22 percent and exports about 12 percent in 2009, Reuters reports. The same report cuts the overall growth forecast from 6 percent to 2.5 percent for 2009.

On the bright side, AFP reports on a 2.7 percent increase in tourist arrivals in the first half of the year.

And on the not-so-bright side, as far as exporters to Cuba are concerned, is that payments for seven months of exports are in a “black hole” in Cuban banks – frozen accounts that could add up to $1 billion, according to La Jornada.

Update on the “black hole:” Reuters, citing business sources, says the government has unfrozen some accounts containing payments to foreign businesses – on the condition that the businesses continue to do business with Cuba.


Anonymous said...

i know specific examples of foreign businessmen trying to get funds out of cuban banks and being refused.
very, very serious situation that has to be resolved immediately or cuba's import situation could end quickly. never seen it so bad in cuba as it was last month, can't imagine how things can continue for much longer, this time it's worse than the SP because the people just don't seem to be willing to sacrifice to the same levels.
they have to stop spending cash up front to american food importers at expense of telling others to keep waiting.

this could be the beginning of some major eruptions.

Anonymous said...

cubans 'on the street' are saying things are worse now than in '92.

Hace falta un cambio de verdad

Is the 'cash up front' US policy still in effect? I thought that had been changed...maybe it's one of the changes that Peters mentions...

Anonymous said...

Cuba imports all its wheat products. An indicator of an import crash is the disappearance of bread. Also edible oils are mostly imported so that would be another indicator of severe import curtailment although the absence of edible oils from the Cuban diet dates back to the 1960s. Maybe Francisco Soberón retired from the Central Bank because he could not take it anymore.

Has anyone confirmed that Carlos Lage's son is in Spain? There are some reports in today El Pais' along those lines.

Vecino de NF

leftside said...

Cuba can't do what most other countries can - float some bonds, beg the IMF or IADB, or just print more currency. The US is even luckier. The worse things get, the more people want to buy our dollars...

Things sound bad on a macro level, but how many Cubans have lost their job? In California we lost 257,000 jobs last month - many of which also lost their heath care. How many in Cuba have lost their health care or child care?? No one.

In contrast to 1993 in Cuba, the lights are still on, there is gasoline and there is nowhere near the desperation.

In California, we just balanced the budget on the backs of the poor and young students. In Cuba they are increasing teacher salaries and the social welfare benefits are never in danger. Cuba chooses to balance its budget on the backs of the wealthy.

California has never had a year this bad since 1936 - in terms of income and unemployment Cuba is still projected to GROW 2.5% this year, while Mexico's GDP may decline by 9%.

Some perspective is needed.

leftside said...

Oh and by the funds in this "black hole" have been released... at least for most foreign businesses. This is part of a broader de-centralization of foreign exchange, Reuters says.

And I am sure Peters caught this line buried somewhere in an internal report obtained by Reuters:

The report blamed the "global economic crisis", the decades-long U.S. trade embargo, hurricanes that hit the island last year and "the low efficiency of the economic model" for a liquidity crisis that has it also seeking to restructure debt with official and commercial creditors.

Anonymous said...

Keep an eye on the bread ration! That's the real indicator.

Vecino de NF

Anonymous said...

leftside, you are a friggin' clown...the USSR blamed its ag failures on bad weather, for 70 straight years!!!!

leftside said...

Anon 7:29. I don't know why you felt the need to reply about the USSR, or where you got the idea that the weather was blamed for 70 years straight? (Try to find a citation for that will you??) But if that is what interests you, here is some suggested reading.

Basically, the idea that USSR agriculture "failed" is a Western myth (helped along by the CIA). Sure the goals contained in the 5 year Plans were not always met, but this is only because the goals were "admirably high." But, by any measure, Soviet agriculture made amazing leaps over the years(production, productivity, etc.).

Meanwhile the idea that capitalist agriculture has somehow succeeded rests on all sorts of skewed ideas. First of all, it does exist given the massive subsidied. Second, it does not take into account massive externalities like waste, environmental degregation, increased unemployment of rural workers (who often moved to cities), the decline of small town America, the corporate control of our food, etc. etc...

Anonymous said...

Lefty, you have surpassed yourself! Yes, the Soviet Union's magnificent success in agricultural production can only be compared to Cuba! And don't pay any attention to those vicious imperialist rumors claiming that the Ukraine alone, which once supplied wheat to the bakeries of Europe, was reduced to starvation by Comrade Stalin! Or the vicious rumor that Cuba, one of the most fertile countries in the world, now produces almost nothing and is forced to import 80% of its food. Lies, I tell you!

leftside said...

Anon, no one is denying the massive dislocations inherent in Stalin's mad rush to collectivize. But I was looking at a 70 year history, as you asked me to, and the results were far from failure. Cuba, of course, is moving away from collectivization - but don't let small facts like that get in the way of you trying to compare apples and oranges.

And since you bring up Ukraine, which has followed the neo-liberal prescriptions devised in Washington, lets take a look at what has happened since 1991. Since the fall of the USSR:

Agriculture in the Ukraine, once the bread basket of Europe, has fallen on sorry times since the collapse of the Soviet Union and independence in 1991.
After government subsidies and guaranteed markets fell along with the Soviet Union, Ukraine's agriculture went into a long decline through the 1990s. By the end of the decade, production volumes had collapsed, agricultural GDP had fallen by half and more than 2mn jobs had been lost in rural areas.

To salvage the situation, the Ukranian Government announced a $1 Billion State investment/subsidy plan last week. A capitalist paradise indeed!

And nevermind that the great pro-Western, pro-market leaders in the Ukraine are presiding over a 15% projected drop in GDP this year - a catastrophre unparalleled in any Soviet time.

Cuba ought to follow the lead of Ukraine and other Eastern European failed states in junking socailism for the all-knowing wisdom of the market.

Anonymous said...

פורקס פירושו מסחר מט"ח וחברות כמו איזי פורקס מספקות פלטפורמות מסחר פורקס בעזרתן קונים ומוכרים מטבעות