7/05/2008

Cuba's slowing economy

How rising costs are hampering Cuban growth

Rising international prices of food and fuel, which account for around 40% of Cuban import spending, are affecting domestic output. The vice-president, Carlos Lage, reported in June that he expects the food import bill to leap from US$1.47bn in 2007 to US$2.55bn in 2008. Most of the food is distributed by the subsidised ration system, so the burden of higher prices (including a threefold increase in the price of rice) is absorbed mainly by the state budget. This has forced a reduction in public investment, which is likely to constrain GDP growth.

It also explains the urgency of government efforts to increase domestic food production and improve efficiency. Although some domestic food prices have been raised, the impact on consumer spending of the higher cost of importing food will be slight. The fiscal impact of higher fuel prices is cushioned by an oil import agreement with Venezuela, which provides financing on favourable terms. ...



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[Source: Breaking News from WarOnYou.com - Posted by Mint Dollar- The Federal Reserves Worst NightMare]

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