Yaima Puig Meneses & Leticia Martínez Hernández

During a Council of Ministers meeting held June 21, President Raúl Castro again emphasized the need to seriously analyze the cause of difficulties damaging the Cuban economy, which continues to show growth, but not at the rate needed.

"We have a giant task before us," he said, "but we cannot allow ourselves to be overwhelmed by problems, or intimidated… We must be optimistic because this has always been the spirit of the Revolution."

The first item on the meeting’s agenda was a report presented by Adel Yzquierdo Rodríguez, minister of Economy and Planning, on the performance of the economy during the first half of 2014, as well as estimated projections for the rest of the year.

He explained, "The Cuban economy is growing as compared to 2013, although not at the levels projected in the Plan, which implies a greater deceleration than expected," reporting that the gross national product grew by an estimated .6% during the first half of the year.

He indicated as fundamental factors: external income projected which was not gained; adverse weather conditions; and internal shortcomings.

"All of this," he said, "within the framework of a difficult international situation and the tightening of the economic, commercial and financial blockade imposed by the United States."

According to Yzquierdo, among the sectors showing the most growth are transportation, storage, communications, agriculture, livestock farming, forestry and the sugar industry, as well as hotel and restaurant services. While deceleration was noted in manufacturing, and other areas are performing at levels similar to those of 2013.

As for the second half of the year, the Minister reported a projected increase in the GNP of approximately 1.4%, which will require "a more dynamic economy in the second half of the year." He emphasized that, given the difficulties faced during the first months of the year, efforts must be focused on promoting efficiency, if this growth is to be achieved.

He additionally reported that initial estimates for the first part of the year - as well as the second - on production, consumption and export of energy resources are positive, while first semester plans for freight transportation were surpassed, a trend which should continue throughout 2014.

Reporting on progress with investments, Izquierda indicated that projections for the first half of 2014 were met, although the Ministry is predicting 95% completion of the annual plan. He said this reflects improvements in management, despite the fact that problems continue in the timely acquisition of supplies; inadequate workforce; low productivity; shortcomings in the contracting process; and provision of external financing.

As for commercial distribution and sales, the Minister reported that performance has generally met projections established in the Plan, although some items have been in short supply, as a result of delays in delivery of imported finished products and raw materials used in domestic manufacturing.

Lina Pedraza Rodríguez, minister of Finances and Prices, reported, "Estimates of the budget’s actual execution during the first half of the year show that income is up 1.3% over the amount projected, as a result of income from taxes on earnings and personal income; social security contributions; and the performance of state investments." She explained that expenditures should come to 97.8% of the amount projected in the budget, primarily due to shortfalls in production. These shortfalls, she said, hurt the economy and are manifested in temporary unavailability of products and the resulting need for more imports. Pedraza additionally reported that salary increases for health care workers are secure, and should not have a negative impact on the budget deficit as approved. The Council of Ministers approved the two reports and their presentation to the upcoming National Assembly of People’s Power.

Next, the Minister of Finances and Prices presented the 2013 State Budget final balance sheet, which the Council of Ministers also voted to submit to the National Assembly.

Pedraza reported that, across the board, income was 97% of the projected amount, recalling that 2013 was the first year of the country’s new Tax Law and its implementation has been gradual, as planned. Eighteen of the 25 obligations established have been implemented – 12 taxes, three contributions and three assessments. She reported that 66% of budget expenditures went to the areas of public health, culture, art, sports, and social assistance.

The budget deficit reached 17 million pesos, 45% of the amount planned. The Minister explained that, although this is within the parameters approved, it is not considered positive, since it is a consequence of the failure the meet income goals; not achieving the expected surplus in running operations; financing not provided to all of the productive efforts planned for exports and the substitution of imports with domestic products; and a shortfall in the level of investment.

She added that not all provinces met their budget goals, and that 124 enterprises, which were expected to produce earnings, finished the year with losses.

Rodríguez emphasized that the lower deficit "is not the result of higher income, but was produced by the failure to make all planned expenditures, which is linked to a lack of efficiency."

Marino Murillo Jorge, head of the Implementation and Development Permanent Commission, presented to the Council of Ministers a report outlining progress made on implementation of the Guidelines approved by the Communist Party of Cuba’s 6th Congress.

Referring to measures identified for implementation in the strategic plan for 2012-2015, Murillo, also a Council of Ministers vice president, said, "A sustained increase can be noted, although actions being taken at this time are qualitatively more complex and decisive to the updating of our economic model."

In terms of the drafting of a long-term Socio-Economic Development Program, he reported that, as a first step, the basis has been determined and approved, a diagnostic of the country’s current strengths and limitations, as well as principles to be followed in the program’s elaboration.

The long-term plan will contain a strategic vision through 2030 - expressed via concrete, measurable indicators - including goals, strategic lines of development, sources of financing, and challenges to be overcome to advance in the construction of a prosperous, sustainable socialist society.

Addressing currency and exchange rate unification, Murillo indicated that work continues in accordance with the timeline approved. Among the most important tasks completed during the first half of the year, he reported, was training provided entities to be involved in the process.

Murillo reiterated, "Currency unification, in and of itself, will not resolve all of the economy’s problems, but does form an indispensable part of the process, which includes the implementation of policies directed toward increasing efficiency and the productivity of labor, in addition to perfecting different mechanisms used to distribute the wealth created."

Referring to the country’s credit policy, he emphasized that the number of loans granted continues to increase, although new collateral options are not being effectively utilized, reporting "Through the month of April, 272,332 loans have been granted, for a total of 2.48 billion pesos."

He additionally commented on the National Assembly’s approval, on March 29, 2014, of the new Foreign Investment Law 118, along with complementary regulations, recalling that provisions of the legislation go into effect June 28.

Murillo reported on the improvement process being undertaken in state entities and leadership systems, saying, "The experiment with new forms of functioning and structures in the provinces of Artemisa and Mayabeque is advancing as planned, despite difficulties identified during evaluations, to which the process has been systematically subjected."

The Council of Ministers voted to propose to the National Assembly that the experiment be extended in both provinces, through December, 2016.

In reference to Central State Administration Bodies (OACE) and other entities, Murillo reported that the selection stage, and the approval of improvement plans for the first group of 20 bodies, has been completed. In general terms, he said the process has allowed for, "progress in the separation of state functions from those of enterprises; as well as adjusting, and making more coherent, the organization of OACE and national entities, to provide more rational and effective public administration."

He summarized the beginning of the process underway to expand the autonomy and authority of socialist state enterprises, with the objective of creating the conditions which will allow them to play the role they are meant to play in the economy, which must be accompanied by greater responsibility on the part of directors, functionaries and participants, he said.

Murillo Jorge additionally reported that, since April 2013, 498 cooperatives have been authorized, only 249 of which had been constituted as of May. He therefore emphasized the need to create a system of evaluation and supervision of the experiment’s progress. He announced that, as of May, more than 467,000 individuals have registered as self-employed, a figure which should continue to grow over the course of the year.

Referring to the experimental produce sales project in Havana, Artemisa and Mayabeque, Murillo said, "The first five months of this experiment’s implementation have been characterized by the restructuring and reconditioning of the retail system, and the initial operation of the wholesale market." Nevertheless, he said, despite a modest increase in availability and variety, production is still inadequate and prices remain high in the markets.

Among a variety of other measures, Murillo reported that unregulated sales of liquefied gas, begun experimentally in Havana, Santiago de Cuba and the Isle of Youth, has advanced without difficulty.

Lastly, he reported that the implementation process is moving forward in accordance with the adjusted timeline, although some target dates have been extended, as the National Assembly is aware.

Murillo emphasized, "Beginning in the second half of 2013, issues of greater complexity and impact on the economic model will be addressed, which implies greater responsibility on the part of all directors and implementers of the proposals and measures approved, as well as an expansion of related follow-up and supervision."

Among the issues discussed by members of the Council of Ministers was the prospective development of renewable energy sources, with Marino Murillo Jorge presenting a proposed policy.

During his introduction he said, "Increasing energy efficiency and taking advantage of renewable sources of energy cannot be postponed, progressively introducing a change in the structure of the country’s energy profile, thus reducing dependence on imported fossil fuels, energy costs and contamination of the environment."

He reported that currently the use of renewable energy is low, with only 4.3% of the country’s electricity generated with these types of resources.

Murillo emphasized that generation, distribution and consumption of electrical energy must become more efficient, since related costs are affecting the national economy, saying, "The cost of electricity is heavily subsidized by the state. Average monthly consumption in the residential sector in 2013 was approximately 180 kw per client, who paid 36.6 pesos, while it cost the state 220 pesos."

Thus the policy approved by the Council of Ministers has among its objectives the transformation of patterns of consumption and production, with an increase in the use of renewable resources to generate electricity emphasized.

"The country’s long-term economic development program will have as one of its objectives the modification of ways in which electricity is generated and consumed. The use of renewable resources must be extended to generation connected to the National Electrical System, and in ways which will reduce consumer demand," he said. Addressing financing for such investments, he said projects will receive a "combination of government credit and direct foreign investment."

He continued, "In the residential sector, the reduction of consumption will be encouraged, establishing a special system of incentives, including a credit policy and prices which stimulate the acquisition of efficient appliances and the use renewable sources of energy."

Marino Murillo Jorge was also responsible for a report on progress in non-state management of restaurants, and providers of personal and technical services.

He reported, "The units which to date have incorporated non-state management modes have obtained positive results. Workers have increased their income; locales have been revitalized; and hours of operation have been expanded; while at the same time, prices paid by the population have risen in accordance with better quality and variety offered."

Given this precedent, the Council of Ministers approved a policy which indicates that establishments which offer restaurant, personal and technical services will, "as a rule," be managed by non-state operators.

The principal means of production will be maintained as state property, while equipment and tools will be rented or sold to cooperatives or individuals managing a site.

Murillo emphasized, "During this period of transition, services offered the population cannot be affected," adding, "The incorporation of these units into non-state forms of management will be implemented in an orderly, gradual fashion, taking into account the number of workers involved, the level of activity and the nature of the services."

Prices will be established in accordance with supply and demand, except for those regulated centrally.

Leonardo Andollo Valdés, second in command on the Implementation and Development Permanent Commission, reported on procedures being followed to extend the pilot project to integrate university studies, as directed by the Council of Ministers in December of 2013, to be implemented in September, 2014, in the provinces of Matanzas, Cienfuegos, Sancti Spíritus, Ciego de Ávila, Camagüey and Guantánamo.

The project will commence in September, 2015, in Pinar del Río, Villa Clara, Las Tunas, Granma, Holguín and Santiago de Cuba, while Havana will be incorporated in 2016.

He recalled that the process implies the fusion or closing of centers to create new universities. These changes are meant to produce better quality instruction and the development of higher education. The number of administrators will be reduced, while the potential of faculties, classroom space, laboratories, and student residences will be better utilized.

Additionally, he said, universities’ relations with provincial government and other entities will be facilitated, and the institutions’ integration within the region promoted.

Next on the agenda, Gladys Bejerano Portela, the country’s Comptroller General and a Council vice president, reported on the occurrence of undisciplined behavior, illegalities, and administrative corruption during 2013, based on reports submitted to the ministry. She reported that shortcomings continue to be observed in supervision systems meant to detect irregularities in a timely fashion. The majority of incidents reported, she said, occurred in locally managed entities and were concentrated in sales outlets and restaurants, especially community services. Incidents in affiliates of national enterprises occurred primarily in entities involved in the production and distribution of food, activities which must be prioritized in risk assessments, she said.

As an important element, Bejerano emphasized that in many cases accounting weaknesses were made evident, with no objective base used in planning, leading to the over-estimation of demand for supplies and raw materials which, in an environment of little control, favor the creation of surplus products. This overproduction contributes to misappropriation. She explained, as well, that the majority of incidents are related to inventory management, contracting irregularities, billing, and accounts receivable and payable.

"These acts are not always evaluated in a critical spirit, or of self-criticism, on the part of those responsible for the management and supervision of their subordinates’ work," she commented.

Bejerano said, however, that despite the fact that the desired impact has yet to be achieved, those working on enforcement and external auditing have gained experience and increased their level of professionalism.

Rodrigo Malmierca Díaz, minister of Foreign Trade and Investment (MINCEX), detailed the main economic problems affecting the country due to irregularities in foreign trade, an issue which has been regularly analyzed in Council of Ministers meetings.

Among the recurring problems, he mentioned payment delays for ship moorings and container handling, late delivery of imports, as well as occasional poor quality.

As part of the actions undertaken by MINCEX for the improvement of foreign trade, he stated that this year Resolution No. 50 was issued, establishing general rules on import and export activities. "The resolution includes, among other aspects, those [regulations] relating to entities’ efficiency in contracting and management, which are designed to prevent economic problems," he stated.

The Council of Ministers was informed of the work of the Biotechnological and Pharmaceutical Industry Group, one year after the merger of the West Havana Scientific Complex and the enterprise QUIMEFA.

Murillo Jorge presented a report and described the difficulty of the process which requires the simultaneous completion of multiple tasks, among them the creation of the Group; the reorganization of the management structure, which included entities with different organizational cultures and accounting systems; the transformation of research centers into enterprises; the fulfillment of production plans; reduction of medicine shortages, and the assuring of exports.

It has become clear, during this short time, that "integration constitutes a strengthening of the development and efficiency of the industries," Murillo said.

Among the results he announced that BioCubaFarma met its export plan and produces 66% of the country basic medicine needs. In addition, supply to the national heath system has improved substantially, and medicines in short supply are decreasing. In regards to research, he announced that 20 new products will enter into production this year; six were granted their medical health certifications; 50 have been developed and are in the final phase before production; and 10 new patents have been registered.

"These results include products of advanced technology and significant impact on health, such as therapeutic vaccinations and cancer medicines, as well as the vaccine against cholera and another against types of pneumococcus bacteria."