Cuba

A

Agriculture, Forestry, and Fishing

About one fifth of the labour force is engaged in agriculture. Sugar is the most important crop in terms of both volume and value. The crop accounts for almost three quarters of Cuba’s export earnings; the country is, in fact, the world’s largest producer of sugar. Poor weather and shortages of machinery, fertilizers, oil, and spare parts have impaired the annual harvest in recent years—production in 1995 totalled 36 million tonnes, less than half the 1990 harvest of 76.2 million tonnes. Production has since recovered somewhat, and in 2005 12.5 million tonnes was harvested. This upturn reflected the success of a strategic push to reverse the sector’s decline. Large numbers of people were mobilized to help during the harvest, priority was given to mending equipment, especially harvesters, and the government secured foreign credits worth US$135 million to help finance necessary inputs.

Tobacco is another traditional crop, which sustains the local cigarette and cigar industry; Cuban cigars, still hand-rolled, are world-famous for their quality. In 2005 34,500 tonnes of tobacco leaves were harvested. Coffee is grown mostly for domestic consumption, although the country is a member of the International Coffee Agreement; 13,500 tonnes of beans were produced in 2005. Citrus fruits are the second most important agricultural export and production has been encouraged as part of efforts to diversify away from dependence on sugar. Emphasis is now also being placed on fruit and vegetables to supply the domestic market, because foreign exchange is no longer available for imports. Livestock herds have declined significantly, again because of lack of foreign exchange for imports of feedstuffs, as well as fertilizers and pesticides. Animals are now less intensively reared.

During the pre-revolutionary period indiscriminate cutting reduced the forested area of Cuba from more than 40 per cent in 1945 to less than 10 per cent in 1960. The new government initiated a reforestation programme; by the end of the 1980s forests covered about 25 per cent of the island. They contain valuable hardwoods like mahogany and cedar, which is used for making cigar boxes, as well as for a variety of forest products such as dyes, gums, resins, and oils. Roundwood removals total about 2.58 million cu m (91.1 million cu ft) per annum. In 1997 sawnwood production totalled about 220,000 cu m (7.77 million cu ft), of which some 60 per cent is hardwood.

The fishing industry traditionally comprised small, independent operators working in cooperatives. The government has developed a sizeable deep-sea fleet, and fish are now an important export earner as well as food source. The catch has declined sharply, however, during the 1990s, as a result of shortage of fuel and spare parts. Between 1989 and 1993 it fell by more than half from 191,889 tonnes to 93,000 tonnes; in 2004 the catch totalled 64,836 tonnes.

B

Mining

Cuba has very large deposits of iron ore, estimated at 3.5 billion tonnes, although they are not exploited to a significant extent. The main minerals exploited commercially are copper, chrome, nickel, cobalt, silica, and barite (barytes). Gold and silver are also mined and salt is evaporated from sea water. After sugar, minerals are Cuba’s most valuable export. As with every other sector of the economy, production has been badly affected by the collapse of Soviet financial assistance and markets at the beginning of the 1990s. However, recovery was well under way by 1995. The sector has proved to be one of the most successful in attracting the interest of foreign companies. The new mining law passed in 1994 to attract foreign investment has brought in companies from Canada, Australia, and South Africa to mine for nickel, gold, silver, copper, and base metals. The largest plant is at Moa Bay, where a Canadian and Cuban joint venture produces about half the country’s nickel output, which totalled about 55,800 tonnes in 1996, compared with about 26,000 tonnes at the beginning of the decade.

C

Manufacturing

In 1996 manufacturing accounted for about 27 per cent of GDP. The most important industrial sectors include textiles, cement, steel, footwear, leather, cigarettes and cigars, tyres, fertilizers and chemicals, buses, refrigerators, and radios. Although the vast majority of the manufacturing sector is state owned and the government still sets objective and production targets, in recent years there have been considerable changes within the sector, precipitated by the ending of Soviet financial support. Private-sector companies have been allowed to set up on a small scale in certain areas, and both private-sector and state concerns producing consumer goods are now allowed to sell directly to the public at market prices, once they have fulfilled their quotas. In addition, subsidies to loss-making companies have been cut substantially, leading to large numbers of redundancies.

D

Energy

The disruption to oil supplies after the collapse of the USSR has hit the Cuban economy particularly hard. The USSR used to supply about 95 per cent of Cuba’s oil requirements. These imports, which were heavily subsidized, were cut drastically in 1992. The fuel shortage has also been disastrous for electricity generation, as it has been for several other sectors, such as transport. Apart from a few hydroelectric facilities, Cuba’s electricity is generated by thermal plants using mainly oil, but also bagasse (sugar-cane fibres). Efforts have been made to increase local production, which now is sufficient to generate nearly one third of electricity requirements. Output of crude oil in 1992 was 771,000 tonnes.

Foreign companies are exploring for oil both onshore and offshore, and in 1995 Russia agreed to provide finance for the completion of the nuclear power plant at Juraguá. Work on the project, which had been financed by the USSR, was suspended in 1992 owing to lack of funds, with one reactor virtually complete and the other in the early stages of construction. When completed the plant was expected to provide up to 25 per cent of national energy requirements. However, in a meeting in Havana in December 2000, Castro and Russian president Vladimir Putin are reported to have agreed to abandon the project. At present there are still acute shortages of fuel, resulting in both power cuts and severely restricted public transport.

E

Currency and Banking

The monetary unit of Cuba is the Cuban peso of 100 centavos (as of early 2007, 23.15 Cuban pesos equalled US$1 at the official rate). Until the end of 1994 the peso was fixed in parity with the US dollar. In December of that year, however, a “convertible” peso was introduced by Cuba’s central bank, the National Bank of Cuba. The peso is not properly convertible, however. Rather, an official exchange rate is announced daily reflecting any changes in the strength of the US dollar. The US dollar was legal tender in Cuba from 1993 until 2004, when it was withdrawn from circulation.

The National Bank of Cuba was created in 1948, and in 1960 all banks were nationalized. Legislation establishing a national banking system was approved in 1984. There are two state-owned commercial banks, one dealing with overseas financing and one with domestic financing, a savings bank, and three state-run insurance organizations.