Cuban government says 2010 deficit running lower than predicted

By Will Weissert, AP
Thursday, July 29, 2010

Cuba: Deficit lower than expected for 2010

HAVANA — Cuba says its budget deficit came in far below forecasts in the first half of 2010, evidence that tax increases and deep spending cuts on food imports may be helping the communist government weather a severe economic crunch.

Cuba reported on Thursday a deficit of nearly $410 million for the six-month period, less than a quarter of the $1.7 billion that central planners originally predicted.

Lina Pedraza, minister of finances and prices, said Cuba generated a bit more than $21.2 billion. Over the same period, it spent $21.6 billion — creating the smaller-than-expected shortfall.

The figures were made public in the Communist-party newspaper Granma. They were approved by the nation’s Economic Affairs Commission, a slate of lawmakers that huddled prior to a full session of parliament Sunday.

Cuba has slashed imports to deal with its economic problems, particularly in the areas of food and agriculture.

But Pedraza attributed the lower deficit to higher taxes and improved collection methods, as well as a new law that pushed back the retirement age from state jobs while upping the amount government employees contribute to, and receive from, state pension funds.

The government controls well over 90 percent of the economy and pays employees about $20 per month, but also provides free education through college and health care. Subsidies also are provided for housing, transportation and some food through monthly ration books.

The outlook remained unexpectedly rosy, according to Pedraza, despite a roughly $198 million deficit created by ordinary Cubans, who have fallen behind on payment plans to reimburse the state for refrigerators, air conditioning units and other appliances authorities have distributed in homes.

The government provided them as part of an effort to save energy and relieve strain on the island’s creaking electric grid, but requires that Cubans pay back the costs of the appliances over time. But many consumers have been unable to keep up with their payments, pushing state budgets further into the red.

Sales also were weak for Cuba’s world-famous cigars and the domestic consumption of industrial goods, beer and eggs.

President Raul Castro is expected to preside over a twice-annual parliament session. The 79-year-old often uses the session to announce new policies, and many are expecting him to make a speech since he did not do so at Monday’s Revolution Day commemoration — the top event on Cuba’s official calendar.

His brother Fidel, who turns 84 on Aug. 13, has made a spate of recent public appearances, but has refrained from talking about Cuban current events, and it was not clear if he would attend parliament.

The gray-bearded Fidel gave up Cuba’s presidency, first temporarily, then permanently, after a health crisis in July 2006. He remains head of the island’s Communist Party and is a parliament deputy, however, though he has not attended a session since December 2005.

(This version corrects that the deficit was created in part by Cubans who have been unable to pay for state-distributed appliances, and not by any reduced by sales of appliances in state stores.))

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