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Cuban five-year plan to eat away at social spending

Text by News Wires

Latest update : 2010-11-11

Cuban authorities have unveiled a new five-year plan designed to slash social spending, including ending the "equal pay" regime, and attract more private capital, in a bid to revive the country's stalled economy.

AFP - Cuban authorities unveiled a new five-year plan Tuesday that calls for cuts in social spending while attracting private capital, as part of an effort to revive the moribund economy in the communist-run island nation.

The document will serve as the basis for debate at next April's Cuban Communist Party Congress, the first since 1997.

President Raul Castro called Monday for the gathering to "update" economic policy.

In October, the Havana government started a process of eliminating 500,000 state jobs by March, and said its ultimate aim is to slash more than one million positions -- a 20 percent reduction in Cuba's workforce.

The Cuban president said the new austerity effort was aimed at saving the social system and resuscitating an economy on the brink.

The plans call for a dose of free-market policies including the end of the "equal pay" regime, to be replaced by a new system in which worker salaries are linked to performance.

The government, which controls some 90 percent of the economy, would start withdrawing by eliminating money-losing state-owned firms, encouraging public-private partnerships and more small private businesses and farms. This would be aided by credits that could be offered to private business owners.

The new plan also calls for consideration of ending the two-tiered currency system that allows foreigners to obtain convertible Cuban pesos while local residents use a devalued peso.

Another measure in the five-year plan would eliminate the longstanding food ration book for Cubans.

The system, created in 1963, allows Cubans to buy limited quantities of basic foodstuffs at subsidized prices, but the items are often resold on the black market.

Last week, President Castro warned that Cuba urgently needed to apply previously announced measures, including adopting self-employment more widely as the government lays off workers, to jumpstart the economy and keep the system from falling over a cliff.

The last party congress in the Americas' only communist regime was held in October 1997. The congress is supposed to be held every five years but has been postponed repeatedly without explanation.

President Raul Castro, 79, also set late in 2011 for the National Convention to name the Communist Party leadership.

The party's current first secretary is revolution icon and former president Fidel Castro, 84.

The man who led Cuba's revolution for almost five decades in 2006 stepped aside as president during a health crisis and handed power to his brother Raul, the country's longtime military chief.
 

Date created : 2010-11-11

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