PESO EXCHANGE RATES REMAIN STEADY- Government-operated Cajas de Cambio S.A. (CADECA) sold the Convertible Peso, equal to one U.S. Dollar, for 24 Pesos across the country, and purchased the U.S. Dollar for 22 Pesos in the city of Havana, tourism resort area of Varadero, and in the country's second-largest city, Santiago de Cuba, as it did throughout the month of May 1997. CADECA purchased the U.S. Dollar for 21 Pesos in central Camaguey Province. Transactions at CADECA offices by Republic of Cuba nationals were limited as the U.S. Dollar was being purchased and sold on the unofficial market for 23 Pesos. The unofficial exchange rate continued to be as high as 25 Pesos to the U.S. Dollar in areas distant from CADECA offices. CADECA began 1997 by exchanging the U.S. Dollar in Havana and in Varadero for 19 Pesos (buy) and 20 Pesos (sell) and in the provinces for 20 Pesos (buy) and 21 Pesos (sell). The official international exchange rate of one Peso to one U.S. Dollar, in effect for more than thirty years, remained unchanged. The government maintains a fixed exchange rate for its international dealings and a more flexible exchange rate for domestic use. The Peso and the U.S. Dollar circulate freely in Cuba.
U.S.-CUBA TRADE AND ECONOMIC COUNCIL MEMBERS SET PRECEDENTS- Members of the U.S.-Cuba Trade and Economic Council have been the recipients of the first, second, and third licenses issued by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury authorizing travel by company representatives to the Republic of Cuba for the purpose of exploring sales opportunities for medical equipment, medical instrument, medical supply, and pharmaceutical products. A member of the U.S.-Cuba Trade and Economic Council was the recipient of the first license issued by the Bureau of Export Administration of the United States Department of Commerce authorizing temporary export of medical equipment to the Republic of Cuba for demonstration purposes during discussions to explore sales opportunities. The license text included the statement: "The approval of this export should be construed as precedent for future exports of medical devices to Cuba." In a related development, the Ministry of Public Health of the Republic of Cuba and Caritas Cubana, a nongovernmental organization affiliated with the Roman Catholic Church, have developed a standard format of an agreement by which United States companies can comply with the onsite verification procedures required by the Government of the United States for the export of medical equipment, medical instrument, medical supply and pharmaceutical products to entities within the Republic of Cuba. The role of Caritas Cubana is voluntary on the part of the organization in its desire to assist the citizens of the Republic of Cuba. This standard format was specifically designed to simplify the onsite verification process and, thus, to increase the ability of and interest by United States companies to export products to entities within the Republic of Cuba.
PRESIDENT CASTRO EXPECTED IN NEW YORK CITY- H.E. Dr. Fidel Castro Ruz, President of the Republic of Cuba, is among 43 Heads of State and Heads of Government registered to attend the "Debate on the Overall Review and Appraisal of the Implementation of Agenda 21 during the Nineteenth Special Session of the General Assembly of the United Nations" in New York City from 23 June 1997 to 27 June 1997. President Castro is tentatively scheduled to deliver an address during the morning of Tuesday, 24 June 1997. The topic of the gathering is the environment, following-up the summit in Rio de Janeiro, Brazil, in 1992.
U.S.-CUBA IMMIGRATION TALKS SCHEDULED FOR JULY 1997- The government of the Republic of Cuba and the government of the United States are scheduled to hold their seventh round of immigration talks in New York City during the first half of July 1997. The last meeting was held 4 December 1996 to 5 December 1996 in Havana. H.E. Ricardo Alarcon, current President of the National Assembly of the Republic of Cuba and a former Minister of Foreign Affairs of the Republic of Cuba and twice Permanent Representative of the Republic of Cuba to the United Nations, normally leads the Republic of Cuba delegation, which also includes H.E. Dr. Fernando Remirez, Deputy Minister of Foreign Affairs of the Republic of Cuba and current Chief of the Cuban Interests Section in Washington, D.C., and Mr. Jose Arbesu, Director of the Department of The Americas of the Communist Party of the Republic of Cuba. Mr. Arbesu previously served as Chief of the Cuban Interests Section in Washington, D.C..
NATIONAL PESO BUDGET UPDATE- The National Tax Office (NTO) of the Republic of Cuba reported that January 1997 through April 1997 revenues and expenditures were as planned toward maintaining a budget deficit of 2% of Gross National Product (GNP). The NTO reported revenues of 4.545.9 billion Pesos, 5% or 217.6 million Pesos more than the first quarter of 1996. The NTO reported that expenditures were according to plan, but provided no details. The 1997 budget expects revenues of 12.143 billion Pesos and expenditures of 12.613 billion Pesos. The NTO reported increased revenues from government-operated and joint venture profit and payroll taxes, while sales tax and service tax revenues declined. Income tax revenues from the self-employed were 17.1 million Pesos more than planned, in part due to higher monthly fees and an increased number of Republic of Cuba nationals engaged in small business activities. The NTO reported that as of 30 April 1997 there were 180,916 individuals licensed as self-employed, 13,719 more than at the beginning of 1997, out of a total estimated Republic of Cuba workforce of 4,500,000.
NATIONAL U.S. DOLLAR BUDGET UPDATE- Sources report that the Republic of Cuba's January 1997 through April 1997 U.S. Dollar budget was operating with an increasingly-large negative balance. The poor sugar harvest, a 12.2% versus 18.5% expected increase in tourism, higher than expected oil prices, higher than expected commodity prices, and lower than expected nickel prices combined to create a minimum US$210 million negative operating balance from January 1997 through April 1997. In response, the government expects to continue to decrease commodity imports and oil imports, thus aggravating shortages of fuel and other inputs, and slowing or eliminating expected 1997 Gross Domestic Product (GDP) growth rates.
THE CLUB HAVANA- Within the next twelve months, The Club Havana, a US$6.4 million project located on Fifth Avenue in the Miramar District of the city of Havana, is scheduled to be inaugurated that will include Internet access, global stock exchange information, bar, smoking room, restaurant (a steak house), two pools, a 250-meter artificial beach, a miniature golf course, tennis courts, a racket ball court, and other athletic facilities. The project is being developed by the Republic of Cuba government-controlled Cubanacan Corporation.
TOURISM UPDATE- The Ministry of Tourism of the Republic of Cuba reported that 429,000 tourists visited the island from January 1997 through April 1997, a 12.2% increase from the 382,400 tourists visiting the island during the same period in 1996. The countries from which the largest number of tourists arrived to the island were Canada, Italy, France, Spain, Germany, and the United Kingdom. The Republic of Cuba expects to receive 1,200,000 tourists in 1997, an 18.5% increase from 1,004,336 tourists in 1996. Gross revenues from the tourism industry are expected to exceed US$1.3 billion in 1997.
LANDLORD TAXES AND FEES TO PROTECT GOVERNMENT- H.E. Manual Millares, Minister of Finances and Prices of the Republic of Cuba, reported that the monthly fees and taxes imposed on individual landlords were being used to protect the government-controlled tourism industry. Minister Millares said that an estimated 10,000 home owners, out of an estimated 2,000,000, rented to tourists at prices far below those charged by government-operated and government-foreign joint venture hotels. He said that the government lost US$50 million to US$70 million in revenues in 1996 due to private rentals and that 21% of tourists visiting the island from January 1997 through April 1997 stayed in private homes. Private landlords are required to pay monthly rental fees, effective 1 August 1997, and are required to file an annual income tax form and pay an annual income tax. The revenues received by the government from private landlords are expected to be used to construct and renovate housing for the population.
NORDIC AIR LINK ESTABLISHED- Denmark's Premier Air began direct DC-10 service to the Republic of Cuba tourism resort area of Varadero on 8 June 1997. The twice monthly charter flight is the first to directly link a Nordic country with the Republic of Cuba.
CIVIL AVIATION PROFITS INCREASE- The Civil Aeronautics Institute of the Republic of Cuba (IACC) reported a January 1997 through April 1997 profit of US$14.4 million, an increase of US$8 million from the same period in 1996. U.S. Dollar profits were US$31 million in 1996 and Peso profits were 30 million. U.S. Dollar profits are expected to be US$40 million in 1997. Republic of Cuba government-controlled airlines carried 739,800 passengers on domestic flights in 1996 and 651,600 passengers on international flights in 1996. General Rogelio Acevedo, President of the IACC, credited improved efficiency and increased business for the performance.
FOREIGN INVESTMENT SOUGHT FOR HIGHWAY IMPROVEMENT- Mr. Oscar Roque Rodriguez, Director of Investment, Administration, and Conservation of the Ministry of Transportation of the Republic of Cuba, reported that there are a number of projects under consideration. He cited the example of a proposed ten kilometer link between the port of Havana and the national highway, valued at US$30 million, where investors would recoup their capital plus interest in three to four years through the use of tolls. He said that twelve toll roads would be established by the year 2000 to earn additional revenues. The government had closed all toll roads in 1959, but re-established one between the city of Havana and tourism resort area of Varadero in 1996 and established one in May 1997 on the causeway from the mainland to the northern coast's tourism resort area of Cayo Coco. Mr. Roque reported that revenues during the first year of operation for the Havana-Varadero toll road were US$700,000.00 and 2.7 million Pesos. Mr. Roque discounted the possibility of using foreign financing to repair the country's highways and roads, more than 50% of which are in fair to poor condition.
RUSSIAN TRADE EXCEEDS US$1 BILLION- H.E. Ricardo Cabrisas, Minister of Foreign Trade of the Republic of Cuba, and H.E. Serguei Shoygu, Minister of Civil Defense of the Russian Federation, reported that 1996 bilateral trade increased more than 200% from US$525 million in 1995 to US$1,146.5 billion in 1996, virtually all in Republic of Cuba sugar exports and Russian Federation oil exports.
RUSSIA REVIEWS STALLED PROJECTS AND DEBT- Republic of Cuba and Russian Federation officials and staff reviewed 12 major development projects stalled since the 1991 collapse of the former U.S.S.R.. Particular attention was given to the Juragua nuclear power plant, Camarioca nickel plant, and Cienfeugos oil refinery. The three projects were in various stages of completion (some nearing 75%) in 1992 when virtually all former U.S.S.R. and subsequent Russian Federation financing ceased. H.E. Yevgeni Reshtnilov, Minister of Nuclear Energy of the Russian Federation, said that construction of the Republic of Cuba's first nuclear power plant would resume in 1998 through a consortium of companies from various countries. He said that companies in Germany, United Kingdom, and Brazil had expressed interest. The consortium would be Russian Federation-controlled. Financing was being sought for the project, any investment within which would, according to Minister Reshtnilov, would be recouped, plus interest, in eight years. The consortium idea was first made public in October 1995, at which time both governments reported that the project would commence in 1996. Plans were later delayed until 1997. Construction of the first reactor at the Juragua nuclear power plant, located in Cienfeugos, 250 kilometers southeast of the city of Havana, was 75% complete, and the second reactor was 30% complete when construction was suspended in September 1992 due to lack of financing. The project itself began in 1983. According to the government of the Republic of Cuba, the equivalent of US$1.1 billion was invested in the construction, largely by the then U.S.S.R. The plant has been maintained through a US$30 million annual Russian Federation grant. According to Mr. Isaac Alayon, Director of the Juragua nuclear power plant, US$750 million will be required to complete the first VVER-440 reactor. Currently, the Republic of Cuba spends an estimated US$1 billion annually importing oil. The Russian Federation holds the Republic of Cuba's U.S.S.R.-issued and U.S.S.R.-based Ruble currency debt, which is estimated at US$17 billion by the government of the Russian Federation, but challenged by the government of the Republic of Cuba.
CHINESE ECONOMIC TALKS UNDERWAY- H.E. Ricardo Cabrisas, Minister of Foreign Trade of the Republic of Cuba, and H.E. Wu Yi, Minister of Trade and Cooperation of the People's Republic of China, are leading their respective delegations at the ninth annual meeting of the Cuban-Chinese Joint Commission for Trade and Economic Cooperation in Beijing from 9 June 1997 to 12 June 1997. The discussions are expected to focus upon expanding trade and possible Chinese investments in pharmaceuticals, agriculture, electronics, tourism, and light industry. In May 1997, a delegation led by H.E. Li Lanquing, Deputy Prime Minister of the People's Republic of China, visited the Republic of Cuba and signed agreements in the following areas: 1) Letter of intent between Xintian Corporation and Republic of Cuba military-controlled Gaviota S.A., to construct a hotel in the tourism resort area of Varadero and to jointly operate a Chinese cuisine restaurant in the city of Havana. 2) A letter of intent to develop a 5,000 hectare rice farm in eastern Granma Province. 3) An agreement between China Chemical and the Ministry of Basic Industry of the Republic of Cuba for the company to increase by 20% its sales of diesel fuel, currently valued at US$80 million. 4) The donation of a digital switching station, equipment, lines, and technical assistance to install and to operate 10,000 telephone lines on the Isle de la Juventud. 5) The granting of a US$6 million interest-free loan to purchase supplies for Republic of Cuba schools. 6) A donation of fifty heavy equipment diesel engines. The People's Republic of China and the Republic of Cuba had bilateral trade exceeding US$300 million in 1996. The People's Republic of China has provided material and technical support for the manufacture and assembly of bicycles, fans, small motors, fresh water fish farming, and rice production.
RAINS HELPING TO END DROUGHT- A week of torrential rains has helped to alleviate a six-month drought in central and eastern Republic of Cuba. Flooding was reported from Sancti Spiritus Province to Guantanamo Province, 350 kilometers to 900 kilometers east of the city of Havana. Civil Defense officials reported 251 homes destroyed, 7,500 homes damaged, and more than 22,000 individuals evacuated. Relatively little damage was reported to buildings, agriculture, or infrastructure. Santiago de Cuba Province, 850 kilometers east of the city of Havana, reported the heaviest rainfall in twenty-five years. Officials of the Ministry of Agriculture of the Republic of Cuba reported that sugar and non-sugar agriculture benefited from the rains.
SUGAR HARVEST UPDATE- The 1996-1997 sugar harvest (November to June) ended with sources reporting that production was 4.2 million tons to 4.3 million tons, which would be at least 200,000 tons less that the 1995-1996 harvest of 4.446 million tons, and 500,000 tons less than was planned for the 1996-1997 harvest. According to Republic of Cuba government-controlled media reports, only three of thirteen sugar-producing provinces met their production plans and at least four provinces produced less than in 1995-1996. According to Mr. Juan Tirana, Director of the University of Havana's Center for the Study of the Cuban Economy, sugar was the country's second-largest U.S. Dollar earner (gross revenues, not net profits), accounted for a direct 7% of and indirect 20% of the Gross Domestic Product (GDP), and was the largest employer in the country. As a result of the poor harvest, and a shift in strategy from increased production to increased efficiency, perhaps as many as 40 sugar mills will be closed. H.E. Dr. Fidel Castro Ruz, President of the Republic of Cuba, has said that to produce one ton of sugar within the Republic of Cuba can cost more than purchasing one ton of sugar in the international market. The Republic of Cuba's sugar industry produced 7.5 million tons annually between 1987 and 1991. From 1992 to 1995, production decreased to 3.3 million tons. In 1996, production increased to 4.446 million tons due to an increase in high-cost foreign credits (US$300 million at interest rates reportedly as high as 20% and, separately, agreements which included 25% of profits from increased production over the previous two harvests, meaning that creditors will receive less return than expected this year).
SUGAR PLANTING UPDATE- 311,775 acres were planted from January 1997 through May 1997, 90% of the 387,426 acres planned and 10,400 acres more than during the same period in 1996. One month ago, 150,000 acres had been planted. An estimated 200,000 workers are sowing between 13,500 and 16,500 acres per day, placing within reach the planned 510,000 acres for the period January 1997 through June 1997. The Ministry of Sugar of the Republic of Cuba announced in December 1996 that 900,000 acres would be planted in 1997, compared with 650,000 acres in 1996, and a similar area in 1995.
In the Medical History Note item which appeared in the 19 May 1997 to 25 May 1997 issue of the ECONOMIC EYE ON CUBA©, the reference to a linkage with the treatment of Schizophrenia was deleted during the editing process the result of which would reduce the significance of the item. The following is the corrected version of the item. Our apologies.
MEDICAL HISTORY NOTE: SUCCESSFUL TREATMENT OF SCHIZOPHRENIA- In 1990, Republic of Cuba scientist Dr. Segundo Mesa Castillo was awarded a grant from the Theodore and Vada Stanley Foundation for his discovery of the Herpes Simplex Hommis Type 1 viral particle which established the viral linkage with this relatively common condition. Approximately 1 out of every 100 United States citizens suffers from this virus. The basic research by Dr. Mesa led to the isolation of the virus and to the development of a simple blood test procedure to determine the presence of the virus. In addition to testing for the virus, Dr. Mesa also managed to successfully treat 89% of the identified cases, using antiviral drugs or interferons. The Republic of Cuba's medical equipment, medical instrument, medical supply, and pharmaceutical sectors produced revenues in 1996 reportedly in excess of US$150 million.
Home
About the U.S.-Cuba Trade and Economic Council
Letters of Cooperation
Realities of MarketCuba©
1998 Commercial Highlights
1999 Commercial Highlights
Who Can Visit Cuba & Conducting Transactions With Cuba
Cuba Internet and E-mail Contacts
Non-United States Companies and Cuba
Foreign Investment and Cuba
United States-based Attorneys
Trademark and Patent Registration
Certified Claims
Special Bulletins
Economic Eye on Cuba© Weekly Newsletter
Congressional Testimony
Publications
Events and Speaking Schedule
Mailing List Request