Why Cuba’s economy is sputtering
TEXT OF STORY
Over the weekend, Cuban president Raul Castro announced
the Communist nation will cut spending on education and health care in an effort to revive its sputtering economy. Right now, growing budget deficits and falling exports are pretty much squeezing the island’s available cash. From the America’s Desk in Miami, here’s Marketplace’s Dan Grech.
DAN GRECH: Cuba is running low these days on yogurt and spare tires. That’s because dairy farms and tire factories in Cuba have cut productions due to a shortage of cash. The Lexington Institute’s Phil Peters says Cuba’s state-run manufacturers can’t raise financing in the typical ways.
Phil Peters: They don’t have access to world bank credit, and the international financial institutions in general. They rely a lot on short-term credit, and in today’s credit environment that hurts them a lot.
Cuba’s cash crunch has led it to fall behind on its bills. Earlier this year the Canadian firm, Sherritt, shut down drilling on the island because of late payments. That’s contributed to the island’s energy crisis.
Peters: There have been factories that have been closed. There are scheduled power blackouts and they’re being told to conserve energy by turning of air conditioning in the offices in the afternoon.
Cuba has kept afloat with subsidized oil from its ally, Venezuela.
I’m Dan Grech for Marketplace.
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