C U B A

Havana.  July 26, 2012

NATIONAL ASSEMBLY OF PEOPLE’S POWER
A good day’s work

O. Fonticoba Gener, José A. de la Osa and Anneris Ivette Leyva

PRESIDENT Raúl Castro Ruz described the 9th Ordinary Session of the 7th Legislature of the National Assembly of People's Power as a good day, while extending congratulations for the 59th anniversary of the assault on the Moncada and Carlos Manuel de Céspedes garrisons.

During the July 23 session and those preceding it, the general consensus guiding the deputies’ work was focused on positive national economic indicators since the implementation of Guidelines approved in the 6th Party Congress.

As the Cuban President stated in his closing address, it is about planning – with rationality and in depth – the principal lines of the economy’s sustainable development, and the resources and infrastructure required for that.

In this context, advances are notable in planning in this area, with a long-term perspective, and in five-year and annual plans.

Marino Murillo Jorge, Vice President of the Council of Ministers, gave a lengthy report on progress in implementing the Guidelines.

Deputies were informed of the country’s 2.1% economic growth in the first six months of this year.

Minister of Economy and Planning Adel Yzquierdo noted that while expectations for this period were not met, the Gross Domestic Product experienced growth in all activities apart from education, although this sector had lower costs.

During the first six months production increased by 4% and, in terms of external financing, Yzquierdo noted that renegotiated bank debts have been repaid, as were those due during the period, thus recouping the country’s credibility in the international commercial sphere.

The Economy Minister stressed that the oil refining and electricity sectors both exceeded targets, by 17% and 1.6% respectively. Other energy sources surpassed the set target by 1.1%.

Osvaldo Martínez Martínez, president of the Economic Affairs Commission, praised last year’s improved fiscal deficit, the lowest since the 1990’s, during his reading of the closing budget statement presented by the Ministry of Finance and Prices.

CHANGES IN THE NATIONAL ASSEMBLY

During this parliamentary session, Deputy Ana María Mari Machado was elected Vice President by secret ballot, after Jaime Crombet’s resignation from the position for reasons of health was accepted.

Mari Machado, Vice President of the People’s Supreme Court, has an excellent record within the court system, where she was an outstanding cadre.

“We ask Jaime to look after himself and overcome this difficult time, so that we can continue waging new battles together,” said National Assembly President Ricardo Alarcón on behalf of deputies, while commenting on Crombet’s spirit of sacrifice, commitment, patriotism and steadfast adherence to revolutionary principles.

Opening the session, Alarcón mentioned the recent appointment of new deputies and lamented the loss of two legislative members, Sara Esther Pereira from Guanabacoa, and Héctor Rodríguez, for whom a moment of silence was observed.

NEW TAX LEGISLATION

The new tax regulations, unanimously approved, provide greater stimulus in areas key to the progress of the national economy, such as agriculture, housing construction, local development and environmental protection, while promoting fiscal discipline and culture.

The proposal, which fulfills the principle of redistribution from sectors with higher earnings to those with less, replaces the 1994 Taxation System Law No. 73, in order to ensure that Cuba’s taxation policy fulfills its regulatory role more efficiently.

Finance and Prices Minister Lina Pedraza stated that the new legislation was drafted by assessing the results of Law No.73, and the experience of more than 20 countries in taxation, adjusting these to the nation’s current context and its economic projections.

The new taxation law incorporates seven new categories to the existing eleven: taxes on idle agricultural and forested land, on the utilization and exploitation of beaches, on the approved dumping of waste in bodies of water, on the use and exploitation of bays, on the right to use inland waters, the use and exploitation of forestry resources and woodland fauna, and customs taxation.

There is also a new social security contribution, provincial contributions for local development, and the maintenance of highway tolls, airport service taxes and those on the placing of public announcements and advertisements.

The new taxation regulations will be implemented gradually through the budget law of the year during which they come into effect.

HEALTH WORKERS ACKNOWLEDGED

The National Assembly leadership asked the Ministry of Public Health (MINSAP) to focus its annual report on two closely related issues: the completition of necessary changes within the national system and the subsequent implementation of the 6th Party Congress guidelines.

The changes undertaken in this sector, preceded and accompanied by information to the public and workers, were directed at continuing to improve the population’s health, increase the quality of and satisfaction with services provided and to make the system efficient and sustainable.

In the MINSAP report Health Minister Roberto Morales Ojeda noted that, at the beginning of this process there were 5,937 neighborhood clinics with family doctors and nurses attending to an average of 2,000 patients; the remainder were treated by nursing personnel or were closed.

In the process of identifying clinics which are needed, 11,492 were defined, of which 99.6% are currently functioning, attending to an average of 1,000 patients. There are still 1,286 shared doctors’ offices and the necessary solutions to this situation are being sought.

In parallel, the Family Doctor and Nurse Program is being updated on the basis of its foundational concepts to provide comprehensive medical attention through appointments, referrals, work on the ground and home visits.

This has made it possible for a larger number of patients to receive treatment for health problems in the offices themselves, based on retaining the Family Program, improving structural conditions and provisions. However, the Minister noted that results are not the same in all these facilities and action is being taken to address this problem.

SURE STEPS ALONG A DIFFICULT ROAD

Given the commitment to systematically inform the National Assembly of progress being made in implementation of Policy Guidelines approved at the 6th Party Congress, deputies had as the first point on their agenda during this session a thorough report on the process by Vice President of the Council of Ministers and member of the Political Bureau, Marino Murillo Jorge, who heads the Implementation and Development Permanent Commission charged with this task.

Referring to the detailed report, President Raúl Castro Ruz reiterated the importance of thoroughly understanding the complexity of these questions and emphasized the appropriate pace of the effort, designed to put measures into practice according to the oft-repeated maxim of working without haste, but consistently.

Thus, deputies were informed about the 2012-2015 Strategic Plan developed by the Permanent Commission.

Among the priorities established is the conceptualization of the country’s economic model, which requires the design of a long-term program to clarify objectives to be met in the future and the economic conditions which must be created now in order to do so, and to ensure that what is done now supports these objectives. This long-term program must be reflected in five-year and annual plans, Murillo Jorge said.

Legislators also had the opportunity to learn about progress made on Chapter 2 Guidelines which refer to macro-economic policies. Murillo affirmed that one of the goals is to reconcile what is included in the budget with the availability of financing and the needs of the country’s economy; as well as adjusting the structure of bank credits, without encumbering the risk analyses which financial institutions must undertake to ensure the repayment of loans.

At the same time, more credit must be available to the population. During the first half of 2012, as a result of Decree-Law 289 - related to the awarding of credit and the provision of banking services to individuals - 47,000 persons were granted loans, for a total of 300 million pesos, 90% of which provided resources for the completion of construction projects.

Along the same lines, in October 2011, policies and measures were approved to rectify the situation of accountable and payable receipts in the country (as outlined in Guidelines No. 46, 48, 50, 51); a problem which, he insisted is a result of the failure to reconcile accounts and indiscipline among enterprise directors.

This point led to a comment by President Raúl Castro, “The issue of outstanding accounts receivable and payable must be definitively resolved and strict discipline enforced.”

FOCUS ON STATE ENTERPRISES

Recalling Guideline No.2 approved by the 6th Congress, which states that the socialist state enterprise is the principal structure in Cuba’s economy, Murillo emphasized that the successful updating of the country’s economic model is facing the non-too-easy task of making this form of management more efficient.

In an effort to meet this challenge, under consideration is an organizational structure to carry out a pilot program with selected enterprises next year. There are several principles which will guide the project, according to Murillo. To be created is a new system of relationships between enterprises, their central management organizations (OSDE) and government bodies, he said. Likewise, a new system of planning in which management teams at the enterprise level will have more authority. The social objectives of enterprises will be more flexible, as well as the approval of prices, taking into account international referents and the cost of production. Which enterprises will participate is currently being studied.

PRIORITIZING SOCIAL PROPERTY

The legislature also approved a policy to govern the creation of cooperatives – the preferred non-state economic structure – in non-agricultural activities. Specific features of these structures were described. They will be based on the use of facilities rented from the state and composed of those who do the work.

This will ensure that when earnings are distributed, individual work is taken into account, and not property ownership, a fairer and more equitable way to function.

As a fundamental characteristic, buildings will continue to be property of the state – leased for up to 10 years – separating ownership and management, with the first being the province of the state and the second undertaken by the cooperative.

The cooperative model of management will be favored in terms of taxes, in accordance with the premise that the most social forms of property are prioritized.

The norms which will guide these pilot projects are in the final stages of development. Close to 200 production and service activities have been identified as appropriate, for example, in agricultural marketing, which comprise almost half of the total. Some measures will be implemented before the end of the year, while others will be incorporated gradually.

To support the effort, $100 million is projected to be included in the country’s 2013 economic plan.

WORK AND PAY TAXES

In relation to self-employment, by the end of June 2012, the sector had grown to include 390,598 people: 233,227 more than in September 2010, a month before regulations expanding this employment alternative went into effect. There has been a notable increase in the number of workers hired (62,747); persons preparing and selling food (57,504); and transportation workers (42,530).

Murillo Jorge assured that the sector is set to grow, with prohibitions being relaxed and obsolete regulations (which do not affect public order) eliminated, in accordance with Guideline No.168.

Murillo went on to announce that, “after an ample discussion process,” deputies would be asked to approve the new Taxation Law (subsequently approved), which, “being more modern and flexible, will allow us to advance in updating the model.”

“This legislation provides that everyone paying taxes on personal income, something to which we are not accustomed; in the case of wage earners, this will be implemented when conditions allow.”

In a different context, Murillo stated that in order to respond to the rapid aging of Cuba’s population, already an irreversible phenomenon and with no short-term solution, a comprehensive strategy is being designed and measures for immediate implementation are being discussed.

To illustrate this, he explained that it has been estimated that by 2021, the difference between those leaving and entering the workforce will have risen to more than 5,700. And, by 2030, the difference will exceed 78,000, making restructuring and careful use of the workforce necessary, bearing in mind the long-term implications.

SECTORIAL DEVELOPMENT

Within the sectorial development plan, a number of actions have been set in motion to promote agricultural production, given that it is a sensitive area of the national economy. As part of these – and in accordance with Guidelines No. 17, 178, 179, 180 and 187 – 17 measures were approved in March to eliminate restrictions limiting the functioning of the Basic Units of Cooperative Production (UBPC’s), which will be extended, as applicable, to the Agricultural Production Cooperatives (CPA) and those of Credit and Services (CCS) 

Among the most significant advances in this sector, mention was made of the policy of marketing agricultural products to be implemented in Havana, Artemisa and Mayabeque provinces from this September. Results forthcoming from this experience will serve as a basis for assessing how to proceed in the rest of the country.

The modification of Decree-Law 259, in accordance with Guideline No.189, was also debated. The principal changes to this legislation relate to expanding the area of land granted in usufruct to 67 hectares for those producing on it, and the right of family members, or those working on the land, to continue to do so in the event of the landholder’s death.

PERSONALIZED SUBSIDIES

In relation to the policy of subsidizing individuals and not products, deputies discussed the sale of construction materials and acknowledged existing quality problems, basically in aluminum trim and bathroom fixtures, which constitute a challenge for industry.

The initial slow response from Municipal Administration Councils in implementing the Council of Ministers regulations on granting subsidies to persons lacking economic resources and in urgent need of home repairs was criticized.

On the cooking of food, it was announced that the unregulated, non-subsidized sale of liquefied gas is being discussed. It was confirmed, however, that the use of electricity, currently used by 69% of the 3.7 million households identified, is the most economical approach for the country, and should continue to predominate.

In terms of maintaining and repairing domestic electrical appliances in this context, measures are to be taken to ensure that spare parts are consistently available, by importing these over a longer period and producing them within the country. Being studied is a price and credit policy to support the unregulated sale of these appliances, without subsidies, but not to generate income.

In the same context, Murillo responded to the concern expressed by a deputy, who asked about possible state guarantees for the repair costs of these appliances, under the new management system for workshops responsible for their repair. Murillo said that the state wishes to maintain current prices, but that this essentially requires a stable supply of spare parts, given that any scarcity of supply for a large demand prompts lucrative attitudes, beyond the reach of regulation.

On the theme of scarcity, Vice President Murillo responded to Deputy Denis Robin Rivero’s concern about persons reselling diverse articles; in the main products not available in the state market. “In order to solve this problem, there has to be more production, there can’t be a lack of supplies.”

In relation to perfecting leadership systems and bodies, pilot programs are continuing in Artemisa and Mayabeque provinces, as well as work with various state central administrative bodies and other entities.