Por Manuel Cereijo

Cuba experienced economic growth during the second half of the 1990s until 2001. At the end of 2000, Cuba reported a GDP growth rate of 5.6% and an average GDP growth rate of 4.6% for 1996-2000.

Soviet assistance and subsidies kept the Cuban economy afloat from the 1960s until the end of the Soviet Union in 1991. After Russia ended all its subsidies to Cuba in 1991, the island's economy went into a tailspin. In order to try to pull out of this economic nose-dive, between 1993 and 1996 the Cuban Government implemented several economic measures, which included "elements of capitalism." Among those measures were permitting foreign investment in limited sectors (tourism and mining); permitting private agricultural production on a small scale; and decriminalizing the use of the U.S. dollar.

These measures allowed Cuba to pull out of the economic crash-dive it experienced in the early 1990s, when the economy contracted by some 50%.

A series of events in 2001, however, contributed to Cuba's economic slowdown:

The events of September 11, 2001;
The devastating effects of Hurricane Michelle, which hit the island in November 2001;
A decline in the world market price for sugar and nickel, Cuba's main export commodities.

Tourism was especially affected, with revenues declining from over $1.5 billion in 2000 to $1.2 billion in 2001. Direct foreign investment dwindled to a record low $38.9 million in 2001.

In 2002, growth slowed for the second year in a row, from 3% in 2001 to a reported 1.1% for 2002. Tourism, which had been projected to grow slightly, contracted 8% in total number of arrivals. Sugar production was down slightly, and revenues fell $120 million to $441 million, also because sugar prices fell on the world market.

Nickel production fell, but this was offset somewhat by the increase in world nickel prices to bring in an estimated $512 million in revenue.

There was no improvement in direct foreign investment in 2002. The island continued to increase dependence on imports and ran a $2.4 billion trade deficit in 2002.

The effects of Hurricane Michelle lasted into 2002 and affected citrus and other non-sugar agriculture. Two hurricanes in the fall of 2002 further damaged citrus and much of the tobacco industry's infrastructure. The only somewhat dynamic industry for the year was oil and gas. However, the government still spent $1 billion importing oil, due to the interruption of Venezuelan supplies that force Cuba to purchase more expensive oil on the spot market. Also, Cuba got a "trueque" of oil from Iran, providing Iran with biotechnology and cybernetic technology and facilities.

In June 2002, Cuba announced the shutting down of 70 of its 156 sugar cane mills, devoting 14 of those remaining to the production of honey and other derivatives or conversion into tourist attractions. In reality, 85 sugar cane mills have been shut down.

Of the nearly 2 million hectares currently devoted to sugar cane plantations, 1.24 million hectares are being diverted to other agricultural uses. This has thrown 130,000 of the nation's 427,000 sugar workers out of work. The plans are for future sugar production to be aimed at meeting the 700,000 ton per year domestic demand, while limiting export levels to around 1.5 million tons.

Predictions for 2003 are that the Cuban economy will experience only a growth of 0.8%. Cuba incurred extraordinary expenditures involving the purchase of oil on the spot market. Sugar cane production in 2003 is expected to be the worst in the history of the industry.


EUROPE: $10.9 billion. Paris Club creditors In 1986, Cuba suspended payments of the debt. Despite on-going negotiations, Cuba has yet to service its debt to the Club since issuing a moratorium in 1987.

Eastern Europe: $2.2 billion.

Russia: Estimated at roughly $20 billion.

Canada: $73 millions


Japan: $1.7 billion

China: $400 million.

Latin America and the Caribbean:

Argentina: $3,517 (2002 est.)

Cuba: $3,000 (2002, including ruble debt)

Mexico: $1,584 (200 )

Brazil: $1,503 (2002)

Ecuador: $1,184 (2001)

Colombia $836 (1997)

Haiti: $151 (1997)

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