Cuba Explains Its Foreign Investment Needs to Russia Based Bankers

Cuba Explains Its Foreign Investment Needs to Russia Based Bankers
May 10, 2014
By Progreso Weekly

HAVANA TIMES – Cuba will need as much as $2.5 billion in direct foreign
investment to boost its economy, said Cuba's top economist, Marino
Murillo Jorge, Thursday (May 8) in Havana.
"The national economy needs an annual [growth] rate of between 5 and 7
percent" of the Gross Domestic Product, Murillo said. Instead,
statistics show that in the past three years the growth rate has not
risen above 3.2 percent. So far this year, it has been 2.2 percent, he said.

Murillo, vice president of the Council of Ministers, had stated his
country's needs in a public setting before, but this was a special
event. He was addressing directors of the International Investment Bank
(IIB) who were in Cuba to evaluate the nation's ability to utilize their
money, in the form of loans, and that of the countries they represent,
in the form of direct investment.

The Moscow-based IIB describes itself as "a multilateral institution for
development, which assists in social and economic development, growth of
people's well-being, and economic cooperation of the member-states."

"The main directions of its activities are the support of the small and
medium-sized business as well as participation in financing socially
significant infrastructure projects," the bank's website says.

According to its mission statement, "the Bank grants loans primarily
through the leading national financial institutions with the
participation of the state, development banks, export and import banks
and agencies; or it lends in partnership with other international
institutions for development."

Cuba's appeal to the IIB for support comes two months after Havana
issued a new Law on Foreign Investment, which will take effect on June 28.

The IIB was created in 1970 by the Council for Mutual Economic
Assistance, an economic bloc founded in 1949 by the former Soviet Union
and its allies. The bank's current member states are Russia, Mongolia,
Bulgaria, the Slovak Republic, the Czech Republic, Romania, Vietnam, and
Cuba.

It is the only multilateral financial organization to which Cuba, a
member since 1974, can turn for credit. Until this year, Cuba had not
participated in IIB activities for almost 10 years, said Nikolai N.
Kosov, chairman of the board.

The IIB is "a sure source" of investment and credit, Kosov said, which
is why its directors are interested in every detail of the Cuban
economic reform.

Murillo explained to the visitors the ongoing process of updating the
Cuban economy — it is already in its second stage, he told them — and
said that the government has decided to abolish the dual currency system
and establish the national peso (CUP) as the only unit of currency.

He also told them that numerous economic sectors are open to foreign
investment but that foreign economic participation will not affect the
socialist nature of the government. Social ownership of the means of
production will not be eliminated, he said.

Murillo said that Cuba is not contemplating a "structural change," only
a "modernization" of the management of the nation's resources.

"The idea is to attain a prosperous and sustainable socialist model," he
said, "to present to the world a strategy of growth and, above all,
development." That development requires "a considerable rate of
accumulation — from 20 to 25 percent — which indicates the need to
access foreign capital," he explained.

The economic reforms "have been carefully studied and well thought out,"
he said, and the Cuban leadership knows when to apply them.

Other presentations were made by Neysa Delgado, Cuba's delegate to the
IIB and vice president of the Foreign Bank of Cuba, and Deborah Rivas,
an official at the Ministry of Foreign Trade and Investment.

As the session ended, the president of the Central Bank of Cuba, Ernesto
Medina Villaveirán, expressed to Kosov and Mongolian economist
Demchigzhav Molmzamts a special recognition "for their systematic work
in support of Cuba," specifically in the renegotiation of Cuba's debt to
the IIB.

Source: "Cuba Explains Its Foreign Investment Needs to Russia Based
Bankers - Havana Times.org" - http://www.havanatimes.org/?p=103544