Cuba embraces economic reform to revive growth

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Cuba embraces economic reform to revive growth

Cuba embraces economic reform to revive growth
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More than 50 years after the Cuban revolution, the founding fathers of the Carribean island’s soviet-style economy have decided to embrace modest market reforms.

The ruling Communist Party appears to accept that price controls and a large public sector are no longer sustainable.

Growth in Cuba has been stifled by a US embargo and huge debts to foreign exporters.

According to the latest data from the Paris Club of Creditors, Havana owed 21.2 billion euros to its members at the end of 2009.

Economists say this cannot continue as the debt is too big to service. A surge in global commodity prices has also seen Cuba spend more on food imports.

Now the government may abolish monthly rations which have long provided Cubans with cheap groceries.

It is also considering granting loans to those who start independent businesses. But President Raul Castro has ruled out a full liberalisation of Cuba’s economy.

In speeches, he avoids using the word ‘capitalism’ although stresses ‘no country or person can spend more than they have.’

Under Castro’s proposals the state will remain the central economic planner and Cuba will remain a nation of one-party rule.

However the harsh reality means the days of cradle-to-grave state care that Cubans have come to expect look numbered.