Cuban government to contract with private sector

Cuban government to contract with private sector
By Marc Frank
HAVANA | Mon Nov 28, 2011 4:46pm EST

(Reuters) - The Cuban government will begin contracting out some
services to the private sector next year in a break from the
state-dominated past aimed at helping small business develop, government
insiders said on Monday.

They said food and cleaning, construction and some transportation
services, all of which are currently done by government workers, were
among those that would be contracted out in the future as Cuban leaders
push ahead with more than 300 reforms to modernize the island's
Soviet-style economy.

President Raul Castro is encouraging private sector growth to create
jobs for the one million employees he hopes to slash from bloated
government payrolls over the next few years. His goal is to strengthen
Cuban communism to assure its future.

More than 350,000 people are now self-employed, more than double the
number of two years ago, although most are small operations based in homes.

Their ability to grow has been hindered partly by a lack of capital and
access to government business, which is significant because the state
controls most of the economy.

But new credit and banking regulations that take effect December 20 will
allow small businesses for the first time to obtain loans and, along
with private farmers, to open commercial accounts, a prerequisite for
doing business with the state.

The measures also lift a 100 peso- (roughly $4-) cap on business between
state enterprises and private individuals.

"It is very positive for the development of the non-state sector that it
now has at its disposal new financial instruments that before were
available only to state companies and joint ventures with foreign
companies," said a local economist, requesting anonymity due to a ban on
talking with foreign journalists.

"It paves the way for business between the new non-state sector and the
state."

Cuba expert Phil Peters at the Lexington Institute think tank in
Arlington, Virginia, said the measures, in addition to helping the
private sector, should make the government more efficient and were
indicative of a larger change.

"It is another sign that the socialist state is shedding longstanding
prejudice against private enterprise," he said.

(Editing by Jeff Franks and Paul Simao)

http://www.reuters.com/article/2011/11/28/us-cuba-reform-private-idUSTRE7AR26420111128