Wednesday, December 30, 2015

Cuba sees growth halving to 2 pct on lower export revenues

Cuba sees growth halving to 2 pct on lower export revenues
By Marc Frank

HAVANA, Dec 29 (Reuters) - Cuba is forecasting that economic growth will
halve in 2016 to 2 percent from this year, and Cuban President Raul
Castro on Tuesday blamed the decline on falling export revenues.

Echoing an earlier statement by Economy Minister Marino Murillo, Castro
confirmed the forecast for a slowdown in 2016 as he closed the
year-end-session of the National Assembly, from which foreign
journalists were barred. His comments were reported by official media.

Castro attributed the decline to "financial limitations associated with
the fall in earnings from traditional exports," the Cuban News Agency
(ACN )reported.

Prices for key exports such as sugar, nickel and refined oil products
have all fallen significantly this year.

Castro said lower oil prices had reduced the cost of a number of imports
such as food but also hurt "mutually advantageous cooperation relations
with various (oil-producing) countries, in particular the Bolivarian
Republic of Venezuela."

The collapse of oil prices punishes Cuba under the terms of its oil deal
with Venezuela. Cuba receives more than 100,000 barrels of oil per day
as part of an exchange that sends Cuban professionals to Venezuela. Some
30,000 doctors and nurses, plus another 10,000 professionals, are posted
in Venezuela.

Cuba also receives cash for the workers. Economists and oil market
experts believe the amount is tied to oil prices, meaning Venezuela
would pay less to Cuba when prices are down.

Cuba refines and resells some of the oil in a joint venture with its
socialist ally. Prices for refined products are down in tandem with crude.

The fall in oil prices has been a major driver of financial markets this
year. Oil prices rose about $1 a barrel on Tuesday, but slowing global
demand and abundant supplies from OPEC members kept energy markets
bearish. Venezuela is a member of the Organization of Petroleum
Exporting Countries.

Traders and analysts said the global oil glut would persist into 2016.

"Cuba's trade with Venezuela represents 15 percent of the gross domestic
product, half of what the Soviets' trade represented," said Cuban
economist Pavel Vidal, a professor at Colombia's Pontificia Universidad
Javeriana Cali.

Cuba continued to receive oil this year, but most likely not all the
cash it may have been owed, Vidal said.

Diplomats and foreign businessmen based in Cuba said state companies
were cutting imports and seeking longer payment terms from suppliers.

(Reporting by Marc Frank; Editing by Daniel Trotta and Cynthia Osterman)

Source: Cuba sees growth halving to 2 pct on lower export revenues -
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