Cuba foreign income could be slashed by $1 billion

Cuba foreign income could be slashed by $1 billion
Tue May 26, 2009 1:44pm EDT
By Nelson Acosta

HAVANA, May 26 (Reuters) - Cuba is facing a "very hard" economic blow in 2009 as depressed nickel prices and reduced tourism revenue could slash foreign income by $1 billion, Cuba's top economic commentator said on Tuesday.

The Cuban government was already reducing imports and limiting production in some industries in response to a growing cash crunch, Ariel Terrero said on state-run television.

Nickel and tourism are two of Cuba's top sources of foreign exchange.

Terrero said prices for nickel had averaged $11,000 per tonne so far in 2009, down from $21,000 per tonne last year, and if they continued at current levels, would cut the island's nickel income for the year by $720 million.

He added that tourism visits had increased in the first quarter, but revenue had fallen 13.7 percent, which over the year would result in a drop in income of $300 million from 2008.

"We are talking about losses that could be $1 billion in a country that brings in about $4 billion for exports (a year)," Terrero said.

"The blow will be very hard," he went on. "The country has at its disposal today less resources. It has available hundreds of millions (of dollars) less and that is affecting the capacity for growth in the Cuban economy."

Terrero's comments were the latest public admission by Cuban economic experts that the communist-ruled island was feeling a heavy squeeze from the global economic downturn.

The head of Cimex, one of Cuba's largest business corporations, acknowledged last week that payments for some goods were being delayed because of a liquidity shortage provoked by, among other things, the global financial crisis and three damaging hurricanes that struck last year.

Foreign businesses have been complaining about slow payments and inability to transfer cash abroad, while Cuban banks have warned they are short of hard currency.

Cuba's state-run press has been calling for a reduction in energy use and has warned that blackouts may begin soon to save money.

The government initially had forecast 6 percent economic growth in 2009, but this weekend Economy and Planning Minister Marino Murillo said the forecast had been reduced to slightly more than 2 percent.

Terrero said effects of the slowdown were already being felt.

"Imports are being reduced, production is being limited in selected industries such as light industry," Terrero said.

"And now we're seeing some instability of supplies in foreign currency stores," he said. (Editing by Jeff Franks and Padraic Cassidy)


Cuba foreign income could be slashed by $1 billion | Markets | Markets News | Reuters (27 May 2009)

http://www.reuters.com/article/marketsNews/idUSN2649168720090526?sp=true