Cuba plans more austerity

Cash-strapped Cuba plans fresh austerity measures and will pressure the sluggish bureaucracy to tighten its belt and cut red tape to address weak growth, falling export earnings and rising debt. The economy has averaged 1 per cent annual growth over the last three years, compared with a 5pc to 7pc rate economists say is needed to recover fully from a 1990s depression caused by the fall of its former benefactor, the Soviet Union.

The communist-run country has more recently been hit by the economic collapse of its new sponsor and strategic ally, Venezuela, which began to send fuel and cash its way in exchange for doctors and medicine 18 years ago. Other external shocks, such as Hurricane Irma in late 2017 and the Trump administration’s tightening of US sanctions, have also weighed on the Caribbean island nation’s economy.

“The 2019 plan is one of adjustment to current realities. We cannot spend more than we earn,” Economy Minister Alejandro Gil Fernandez said at a session of the National Assembly last week. State-run companies account for and control most economic activity, including finances and foreign trade, through a planned economy.

Cuba last reported its foreign debt at $15.8 billion in 2015. It began delaying payments to some suppliers and investors in 2016, with western diplomats and businessmen estimating the short-term debt accumulated since then at more than $1.5bn.