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Americas Americas

Castro looks to tighten purse as slump deepens

Latest update : 2008-12-31

Cuban leader Raul Castro announced efforts to slash public spending in a bid to help a stagnant economy battered by three hurricanes and the global economic crisis. As a result, he said, a planned government restructuring would have to be postponed.

REUTERS - Cuban President Raul Castro called on Saturday for austerity measures including fewer subsidies for workers and stricter management to pull the country out of an economic morass aggravated this year by three hurricanes and the global financial crisis.

He told a year-end meeting of the National Assembly the government would cut official trips abroad by 50 percent and eliminate programs that reward good workers with free vacation trips but cost the government $60 million a year.


"The accounts don't square up," he said. "You have to act with realism and adjust the dreams to the true possibilities," said Castro, who officially replaced his ailing older brother Fidel Castro as president in February.

"Two plus two always equals four, never five," he said.


Castro implemented reforms when he took office, including opening the sale of computers and cell phones to Cubans and allowing them to go to hotels and stores previously reserved for foreigners.


But he said the country's economic problems would postpone some changes, including a planned government restructuring.

Castro lamented the economic effects of hurricanes Gustav, Ike and Paloma, which caused $10 billion in damages, and warned that no one can tell how bad world economic problems will get.


Cuba's import costs have soared while prices for key exports such as nickel have plunged, requiring the communist-run country to impose greater fiscal discipline, said the 77-year-old Castro.

Other government officials told the assembly Cuba's budget deficit had climbed to 6.7 percent of the gross domestic product as the economy grew at a slower-than-expected rate of 4.3 percent in 2008. They forecast 6 percent growth for 2009.


Before his speech, the assembly voted to raise the age at which workers can retire with a government pension by five years, to 65 for men and 60 for women. Officials said the change was needed because Cuba's population was aging rapidly due to a declining birth rate and immigration.

Castro said Cuban managers need to demand more from their workers, who receive free education and health care and subsidized food rations but on average earn only $20 a month.


"I have arrived at the conclusion that one of our big problems is a lack of systemic demand," said Castro.


He expressed dissatisfaction with the system of subsidies for those who can work, but do not, saying government handouts discourage Cubans from being more productive.

As Cuba prepares to mark the 50th anniversary of the revolution that put Fidel Castro in power on Thursday, Raul Castro paid tribute to him as the person "who has led us yesterday, today and always to victory and victory."


Fidel Castro, 82, has not been seen in public since undergoing intestinal surgery in July 2006.

Date created : 2008-12-28