Cuba economy czar: Reforms entering critical phase

Cuba economy czar: Reforms entering critical phase
ANDREA RODRIGUEZ 9
PoliticsBudget, Tax & EconomyCuba

HAVANA (AP) — Communist-led Cuba's experiment with limited capitalism is
entering a crucial and transformative phase this year with the
decentralization of bloated state-run businesses, the island's economic
czar said Tuesday.

Marino Murillo said the goal is to improve efficiency of those
businesses and let the successful ones keep more of their profits.

Murillo said the next 18 months will be the "most complex" part of
President Raul Castro's reform program, which has already seen limited
openings to private entrepreneurship and a relaxation of many social
restrictions.

"The first stage of the reforms has so far, fundamentally, been the
elimination of prohibitions in society," Murillo said in just his second
face-to-face encounter with foreign journalists since he rose to
prominence three years ago.

"During what remains of the year 2013 and in 2014, we will work on ...
the most profound transformations," he added.

Castro's economic and social reforms, which began in 2010, aim to
resuscitate a flagging economy with a smattering of free-market
principles, though officials insist that a wholesale embrace of
capitalism is not planned.

After five decades of a state-dominated economy, hundreds of thousands
of people have legally gone into business for themselves, private
farmers are cultivating land with the government's blessing and dozens
of independent nonagricultural cooperatives were launched recently under
a pilot program.

Authorities have also approved home and used car sales, eased travel
restrictions and established mortgages and small-business credits.

Outside analysts have questioned the scope and pace of the reforms,
saying so far they have been insufficient to turn around the economy and
attract foreign investment. In a speech over the weekend, Castro himself
acknowledged that most Cubans have yet to feel the benefits of a slowly
growing economy.

Murillo did not give many details about the next stage of the reforms,
such as which companies will be decentralized and what will happen to
those that fail. An effort to give more autonomy to the sugar industry
in 2012 that included new leadership and a restructuring of the
once-powerful Sugar Ministry has yet to result in improved harvests.

Murillo said the changes contemplated over the coming months include
letting state enterprises keep up to 50 percent of revenue to reinvest.
Currently all earnings go to the government, which controls all spending
and distributes resources to successful and failing enterprises alike.

"We must remove all impediments that put the brakes on possibilities,"
Murillo said.

He acknowledged the island must attract more foreign investment, but
insisted that Cuba will do so on its own terms and will not accept
business proposals that don't contribute to the island in the way of
technology, financing or employment.

While some economists have argued that Cuba is in desperate need of an
injection of capital, Murillo insisted foreign investment is merely "a
complement" to the country's plan for economic development.

Cuba does not have access to international capital markets, and U.S.
economic sanctions in place since the 1960s freeze it out of some
potential lending sources.

However, the country has grown closer to countries such as China and
Venezuela and has received soft credits particularly from the latter,
which supplies enough oil to meet half of the island's consumption at
highly preferential terms.

Later Tuesday, Labor Ministry spokesman Carlos Mateu told reporters that
a plan to eliminate a half-million workers from bloated state payrolls,
announced by Castro in 2010, did not turn out as expected.

Mateu said that instead there was a kind of realignment of labor, with
many workers leaving government jobs to open or work for small
businesses. In other cases, redundant state workers were transferred to
posts where there was more of a need.

"We realized that a phenomenon of movement was occurring in the labor
force," Mateu said.

He added that 429,000 Cubans are now licensed as independent workers.

The government remains by far the largest employer, accounting for 77
percent of jobs among the island's 5 million-strong workforce.

The other 23 percent comprises private entrepreneurs, their employers,
independent farmers and cooperatives.

___

Andrea Rodriguez on Twitter: www.twitter.com/ARodriguezAP

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