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4 months ago
Cuba warns of further belt tightening as Venezuelan crisis deepens
April 28, 2017 / 3:59 PM / 4 months ago

Cuba warns of further belt tightening as Venezuelan crisis deepens

HAVANA, April 28 (Reuters) - Cuba plans to reduce spending further in 2018 following two years of budget cuts, the ruling Communist Party newspaper Granma wrote on Friday, as a deepening crisis in socialist ally Venezuela puts the squeeze on its finances.

The Caribbean island began to slash imports and reduce the use of fuel and electricity last year, sending its centrally planned economy into recession for the first time in nearly a quarter century.

"The basic premise (of the 2018 plan) is to meet production and service goals through efficiency and a lowering of costs to levels less than in 2017," Granma wrote on Friday, citing a presentation of Economy Minister Ricardo Cabrisas to the Council of Ministers.

In the wake of the 2014 crash in oil prices, Venezuela has reduced shipments of subsidized fuel to communist-run Cuba, as well as payments for Cuban professional services.

Other oil-producing allies, such as Angola and Algeria, also find themselves short of cash to pay for Cuban services.

A boom in tourism has not been enough to stem the hemorrhaging of hard currency in a country embargoed by the United States. Cuba does not publish up-to-date information on its debt, balance of payments and current account.

Cuban President Raul Castro admitted a year ago that the country was strapped for cash, adding in December that it was having trouble paying suppliers and thanking them for their patience.

The economy shrank 1 percent last year, he said, after averaging 3 percent growth the previous four years.

Relatively minor gas shortages appeared this month and the supply of imported consumer goods has been irregular this year.

Diplomats and foreign businessmen said some joint venture partners were having problems repatriating profits as state-run banks were short of cash to send abroad.

"It was reiterated that the plan (2018) must be objective, adjusted for the resources the country has," Granma wrote. (Reporting by Marc Frank; Editing by Dan Grebler)

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