The Green Screen
from Reuters, Cuba's 2001 economical figures


Cuban GDP grew 3 pct in 2001, recovery slows.

Friday July 5, 1:58 PM EDT
By Marc Frank

HAVANA, July 5 (Reuters) - The Cuban economy grew 3 percent last year, slower than forecast due to the Sept. 11 attack in the United States and a devastating hurricane, said a Central Bank report seen by Reuters on Friday.

The report, the first official figures for 2001, showed recovery from Cuba's post-Soviet crisis has slowed, while trade and balance of payments deficits remain high, setting the stage for the island's current financial woes.

Growth had been forecast at 5 percent for 2001, down from 5.6 percent the year before and 6.2 percent in 1999, according to the annual report to creditors and key economic partners.
"The international economic slowdown, aggravated by the terrorist attacks on the World Trade Center ... and Hurricane Michelle, the most intense storm in half a century" slowed recovery, the Central Bank said.

Trade declined 0.9 percent to $6.4 billion last year and the trade deficit shrank 1.0 percent to $3.120 billion, while the current account deficit fell 19 percent from $776 million to $553 million, according to the report.

Local analysts said the decline in deficits was not enough to offset increases over the last few years that have left the indebted and import-dependent country vulnerable to any drop in hard currency revenues.

The Central Bank said the foreign debt at the end of 2001 was $10.893 billion, similar to 2000. That does not include money owed to the Soviet Union and other former communist countries in Europe. Russia claims Cuba owes it $20 billion.
In 2000, Cuba's trade deficit rose 8.1 percent and the current account deficit 44 percent, after rising 7.4 percent and 16 percent, respectively, in 1999.

Many Third World countries have big deficits and debts, but unlike Cuba, they have access to long-term funding to cover them. Because Cuba faces a U.S. embargo and regularly defaults on debt payments, it has very limited access to credits and aid to cover its deficits and keep developing.

Since the Sept. 11 attacks in the United States, Cuba's hard currency revenues have fallen substantially due to the decline in tourism, the island's key hard currency earner. Sugar prices have also fallen and Russia closed an electronic eavesdropping station on the island for which it paid $200 million a year in rent.

2001 CURRENT ACCOUNT
Cuba's communist government has slashed imports, adopted austerity measures and defaulted on debt payments to public and private creditors this year due to the revenue shortfall.

The country is still recovering from the economic crisis it was plunged into when the Soviet Union collapsed more than a decade ago. Cuban gross domestic product fell 35 percent between 1989 and 1994, before a slow and uneven recovery began, picking up after 1998.

Once-secretive Cuba now publishes detailed economic data, but more than a year after the fact. The report to creditors and key trade partners, based on some preliminary statistics and released around mid-year, is the earliest and most reliable public record on the previous year's economic performance.

The Central Bank's 2001 current account figures showed exports were $1.662 billion, compared with $1.676 billion in 2000, and imports $4.782 billion, compared with $4.829 billion in 2000. That left a $3.12 billion trade deficit, compared with a $3.15 billion trade deficit in 2000.

Debt principal and interest payments and profit-taking by foreign businesses operating in Cuba, declined to $502.2 million from $622 million in 2000.

Revenues from tourism and other services were $2.213 billion, compared with $2.336 billion in 2000, the Central Bank said.

Income from family remittances from Cubans abroad and other money transfers totaled $813 million, compared with $740 million in 2000.

"The current accounts deficit of $552.7 million was financed by a $594.5 million surplus in the capital and finance account," the Central Bank said.

While the amount of Cuba's reserves are a carefully guarded secret, the Central Bank said they increased by $48.1 million last year, compared with a $29.4 million increase in 2000.

The GDP totaled 27.273 billion pesos at the end of 2001, or 2,429 pesos per capita, the report said. The Cuban peso is officially pegged at par to the U.S. dollar, but trades at 26 to the dollar at government exchanges houses and on the street.

©2002 Reuters Limited.