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Country and Currency
Austria-Shilling
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Exchange
13.1470
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Re-Exchange
12.7133
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UNITED STATES COMPANIES SEEKING ADDITIONAL TRAVEL LICENSES- According to executives and representatives of United States companies, and confirmed by United States government sources, there have been a substantial increase in the number of licenses requested to engage in travel-related expenditures, including the transportation of product samples, for visits to the Republic of Cuba by United States companies in the medical equipment, medical instrument, medical supply, and pharmaceutical industries. Such visits have been authorized since October 1996 after a lengthy review by The White House initiated by members of the U.S.-Cuba Trade and Economic Council. The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, D.C., issues licenses for travel-related expenditures. The Bureau of Export Administration (BXA) of the United States Department of Commerce in Washington, D.C., issues licenses for the temporary export of product samples and for export sales of products.
STET AND ITT REACH AGREEMENT ON CERTIFIED CLAIM USAGE- ITT Corporation of New York City and STET International, a subsidiary of Italian government-controlled STET, have reported an agreement whereby STET International will pay approximately US$25 million to ITT Corporation for a ten-year right to use assets within the Republic of Cuba upon which ITT Corporation has a claim registered with the United States Foreign Claims Settlement Commission in Washington, D.C., the total value of which is approximately US$130.7 million. STET International is the minority partner in the Republic of Cuba government-controlled joint venture ETECSA, which manages the telephone system on the island. STET, the world's fifth largest telecommunications company in terms of revenues, controls 4 million fixed and 300,000 mobile phones in Latin America and the Caribbean.
AMERICAN AIRLINES INVESTING IN AEROLINEAS ARGENTINAS- American Airlines, Inc., a unit of AMR Corporation, has agreed to purchase a 10% share in Aerolineas Argentinas S.A., the national air carrier of Argentina. C. & T. Charters, Inc., of Miami, Florida, and Airline Brokers Company, Inc., of Miami, Florida, have chartered Aerolineas Argentinas aircraft (Boeing 747's during the Christmas holidays) for direct flights (before February 1996) and indirect flights (after February 1996) between the United States and the Republic of Cuba. C. & T. Charters, Inc., and Airline Brokers Company, Inc., are two of the three companies licensed by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, D.C., to provide transportation services to individuals authorized to travel to the Republic of Cuba. In addition, American Airlines has an option to purchase a minority share in Spanish government-controlled Iberia Airlines, which is expected to be privatized by 1998. Iberia Airlines has longstanding relationships with the Republic of Cuba, ranging from regularly-scheduled flights to technical cooperation agreements. In a recent related development, the Italian government-controlled telecommunications company, STET, which is expected to be privatized before the end of 1997, and New York City-based AT&T agreed to establish a joint venture to develop the Latin American telecommunications market. STET owns significant equity interests in the national telecommunications companies of the Republic of Cuba, Argentina, Bolivia, Chile, and Venezuela; is currently negotiating a major project in Brazil; and owns 25% of IMPSTAT, the satellite communications company. AT&T has holdings in 15 Latin American and Caribbean countries. STET and AT&T officials said the joint venture did not include the Republic of Cuba. The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, D.C. specifically authorizes companies subject to United States law to have non-controlling investments in third country companies that have commercial activities within the Republic of Cuba provided that the investments do not result in control in fact of the third country company and provided that a majority of the revenues of the third country company are not produced from commercial activities within the Republic of Cuba. [Opinion by OFAC dated 4 March 1994].
SHERRITT INTERNATIONAL SIX MONTH REPORT- Sherritt International Corporation, a Canadian firm with extensive Republic of Cuba nickel and other interests, reported January 1997 through June 1997 revenues of CA$176.9 million, a 26% increase from the same period in 1996. The company reported that the increase was due to revenues from a non-Republic of Cuba fertilizer business. The Company reported net earnings stagnated at CA$5 million, compared to CA$20.2 million during the same period in 1996. The company reported increased nickel plus cobalt production at its Moa Bay processing plant and Alberta, Canada, refinery, both jointly owned with companies controlled by the government of the Republic of Cuba, more than offset decreasing nickel and cobalt prices. The company continued to explore for oil and natural gas in a number of Cuba locations. The company reported that second quarter operating earnings from Republic of Cuba tourism and agricultural holdings increased 20% to CA$600,000.000, compared to the same period in 1996. Sherritt International completed the public sale in late 1996 of US$675 million of 6% 10-year convertible unsecured subordinated debentures. The first installment of US$500.00 per US$1,000.00 debenture was paid on closing, with the final installment payable no later than 1 December 1997. The company reported last week that it continued to study and negotiate the investment of a large portion of the raised funds in Republic of Cuba power generation, sugar, transportation, real estate, and communications sectors.
COMMISSION WORKS TO IMPROVE COMPANY ACCOUNTING- H.E. Raque Hernandez, First Vice Minister of the Ministry of Economy and Planning of the Republic of Cuba, said that a series of measures were being adopted by Republic of Cuba government-operated companies to improve administrative procedures and accounting. Vice Minister Hernandez said that a government commission was established in 1996 to oversee the process after learning that 75% of local companies' accounting practices were poor. Vice Minister Hernandez said that measures included the training of company managers and accountants, modernization of equipment, and increased salaries for accountants and auditors. By 1967, accounting had all but disappeared along with market relations. The gradual transformation of the economy since 1991 has led to a revival of accounting and official recognition of the important role accountants have in a country's economic performance.
U.S. DOLLAR RETAIL STORES EXCEED 1,200- Republic of Cuba government sources reported there were more than 1,200 retail outlets selling goods and services priced in U.S. Dollars to Republic of Cuba citizens. The outlets, which do not include most tourism-related retail stores, reported sales of US$640 million in 1996, with 1997 sales expected to increase 10%. The outlets range from supermarkets, department stores and fast food restaurants, to clothing, toy, hardware, and stationary stores. The Republic of Cuba legalized the circulation of the U.S. Dollar concurrently with the Peso in September 1993 and thereafter began opening U.S. Dollar retail stores. More than 1,300,000 workers regularly receive U.S. Dollar and U.S. Dollar-based bonuses, and individuals of Cuban descent living abroad annually send between US$400 million and US$600 million to relatives living on the island. Many of the 60,000 persons working directly in the tourism industry receive U.S. Dollar gratuities.
INFORMAL ECONOMY REDUCED- Republic of Cuba government sources reported that Republic of Cuba citizens spend approximately 30% of their income in the informal economy, compared to 60% in 1993. The Republic of Cuba's informal economy ranges from the market in stolen goods to legitimate purchases of produce from local farmers. The sources attributed the gradual decline in the informal market to the legalization of the U.S. Dollar and various forms of self-employment; the opening of supply and demand produce and industrial markets; and the increase in products and services offered by Republic of Cuba government-operated retail stores.
TOURISM UPDATE- H.E. Eduardo Rodriguez de la Vega, Vice Minister of the Ministry of Tourism of the Republic of Cuba, said that 579,300 tourists visited the island from January 1997 through June 1997, 15.3% more than the 502,200 visitors received during the same period in 1996. Minister de la Vega said that the island would received 610,700 tourists during the remainder of the year, 21.5% more than the 502,200 received during the same period in 1996, for a total of 1,190,000 visitors in 1997, 18% more than the 1,004,300 tourists registered in 1996. He said that while he expected an accross the board increase in tourism, the Ministry of Tourism's marketing strategy had emphasized attracting tourists during the traditionally slow months of May, June, September, and October. In order to achieve a more efficient use of existing facilities, the Ministry of Tourism has established country by country commissions, and taken other marketing measures, to insure plans to receive 1,400,000 tourists in 1998, and 2,000,000 tourists in the year 2000 are met. The ministry of tourism reported that tourist receptions and gross tourism income was as follows: 1990 - 327,400 tourists and US$243.4 million; 1991 - 418,000 tourists and US$387.4 million; 1992 - 455,200 tourists and US$567 million; 1993 - 544,100 tourists and US$720 million; 1994 - 617,300 tourists and US$850 million; 1995 - 738,000 tourists and US$1.1 billion; 1996 - 1,004,300 tourists and US$1.3 billion. France, Italy, Great Britain, Germany, Spain, Chile, and Mexico are expected to provide the majority of increased tourist arrivals this year, and increased flights to and from the Republic of Cuba were being made available in a number of countries, including Canada, Germany, France, and Great Britain.
ITALIAN TOURISM COMPANY INCREASES CUBA BUSINESS- Mr. Bruno Colombo, President of Viaggi del Ventaglio, Italy's prominent long distance tourism company, said his company would bring 60,000 tourists to the Republic of Cuba annually by the year 2000, compared to last year's 27,000 tourists. Mr. Colombo, who was recently in the republic of Cuba to explore future hotel management and joint venture agreements, said that by the year 2000 his company's VentaClub susidiary would manage and market 900 tourism rooms in the Republic of Cuba.
EVENT TOURISM GROWING- Mr. Fernando Santos, Director of Event Tourism for the Republic of Cuba government-operated CUBATUR travel agency, reported sales of 13,500 event packages valued of US$3.4 million from January 1997 through June 1997. Mr. Santos said that an additional 15,000 tourists would be handled by his division through the end of the year, beginning with 1,500 tourists, mainly from Latin America, expected for the World Youth and Student Festival 28 July 1997 through 5 August 1997.
CITRUS UPDATE- The Victoria de Jiron citrus orchard produced a record 440,000 tons of fruit during the 1996-1997 harvest year (currently July-July). The previous record was set in 1989-1990 when the orchard produced 437,700 tons. Officials said that the new record was established with 6,573 workers, 5,670 students, and 206 military recruits, compared to the 10,500 workers and 23,265 students used in 1989-1990. The officials said 24 liters of gas were used per ton produced, compared to the 42 liters of gas used per ton produced, 1989-1990. The orchard's proccessing plant reported a record 316,000 tons of fruit was processed into juice and extracts, mainly for export. H.E. Alfredo Jordan, Minister of Agriculture of the Republic of Cuba, said in May 1997 that the 1996-1997 citrus harvest would be approximately 700,000 tons, compared to 600,000 tons produced in 1995-1996, and 536,000 tons produced in 1994-1995. The Republic of Cuba was the world's largest citrus exporter, producing 1 million tons of fruit in 1988-1989, 800,000 tons of which was exported to the former U.S.S.R. and U.S.S.R.-led countries. The industry has been gradually recovering since 1991, in part due to joint ventures established with Chilean, Greek, and Israeli companies. Republic of Cuba citrus fruit and juice are exported to the European Union countries, the Middle-East, and South America.
SUGAR UPDATE- The Armed Forces of the Republic of Cuba took control of the management of the Harlem sugar mill, approximately 150 kilometers west of the city of Havana. Granma, the official daily newspaper of the government of the Republic of Cuba, reported that the change in control from the Ministry of Sugar of the Republic of Cuba to the military was aimed at turning the mill into an example to follow for the other 155 mills in the country. Sources from the industry said the move was part of a broader reorganization begun after the just completed 1996-1997 harvest's worse than expected performance. Granma reported that the Armed Forces' Young Army of Labor would manage the mill, with a 2,500 ton daily milling capacity, and that the Ministry of Sugar would be responsible for supplying the cane. "The Armed Forces management system, which has demonstrated its efficiency in diverse spheres, will to be applied at Harlem," said Granma. The Armed Forces has always counted a large civilian sector to produce supplies. However, during the last seven years it has become increasingly involved in such diverse sectors as tourism, banking, citrus, and air charters. Industry sources said that the government had begun to apply reforms to the sector that had proved successful in other sectors such as basic industry and fishing. The reforms in the other sectors included up to a 75% reduction in ministry personnel and decentralization of productive activity. The sources said numerous Ministry of Sugar personnel were being relocated to sugar mills, which in turn would be given more independence, if not seperated entirely as quas-independent Republic of Cuba government-operated companies. The sources said the Armed Forces management of the Harlem mill was aimed at developing a model for other mills to follow as they moved away from Ministry of Sugar centralized management. Sugar production, once the foundation of the economy, exports, and U.S. Dollar earnings of the Republic of Cuba declined from an average 7.5 million tons in the 1980s, to a 50-year-low 3 million tons during the 1994-95 harvest (November-June). The government of the Republic of Cuba initiated an ambitious recovery plan in 1994, with the support of hundreds of millions of U.S. Dollars in short term credits. Produstion increased 33% to 4.46 million tons during the 1995-96 harvest, but decreased again during the just concluded harvest to approximately 4.25 million tons.
GOVERNMENT COMPETES WITH PRIVATE RESTAURANTS- Mr. Jose Antonio Salazar, Director of the city of Havana's government-operated restaurant chain "Ofertas," said that one hundred outlets were opened during the first months of the chain's existence. Mr. Salazar said the outlets included the "Dona Yuya" mini-restaurants located in the more properous areas of the capital. The restaurants, designed to compete directly with private restaurants, seat up to sixteen guests, and are operated by four workers per shift who receive a percentage of profits. Mr. Salazar said Ofertas was also opening kiosks, bars, and taverns, and would operate 400 establishments by the end of the year. Mr. Salazar said Ofertas' prices were based on supply and demand but would always be less than those of the private sector. Private restaurnats known as "Paladares", were legalized in 1995, and can seat up to 12 persons at a time. The Paladares are heavily regulated and taxed, can employ only family members, are not permitted to serve beef or seafood and must purchase all supplies at government-operated retail outlets and private produce markets. There are more than one thousand Paladares operating in the city of Havana and thousands of other private food and beverage vendors.
PALMARES RESTAURANTS UPDATE- The palmares company, a subsidiary of the Republic of Cuba government operated Cabanacan tourism coporation, reported earnings as planned towards this year's US$23 million goal, US$7 million more than in 1996. Mr. Mario Escalona Director of Palmares, which operates a number of well known restaurants in the city of Havana such as El Aljibe (the highest grossing restaurant in the country where each employee generally earns 230 Pesos per month and approximately US$190.00 in gratuities), La Ferminia, La Cecilia, and the Tocororo, said that profits would reach US$9 million. He said that the company, which also operates cafeterias, bars, and bakeries, would open Tocororo restaurants in Milan, Madrid, and Barcelona later this year, as well as a Republic of Cuba catering service in 1998.
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Item
RICE (LB)
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Havana
4 (5)
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Camaguey
6 (4.5))
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Santiago de Cuba
7 (7)
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The ECONOMIC EYE ON CUBA© has, at various times, referred to Cajas de Cambio S.A., (CADECA) as controlled by the military of the Republic of Cuba. Mr. Sergio Plasencia, Vice President of the International Division of the Central Bank of the Republic of Cuba, has written to inform that while CADECA is Republic of Cuba government-controlled, CADECA is "an entity which belongs to Grupo Banca S.A., a holding company which does not have any relation to the Armed Forces."
In the 14 July 1997 to 20 July 1997 issue of the ECONOMIC EYE ON CUBA©, there were two errors: First, in the item CADECA DISCUSSES PESO VALUE on page one, the statement that "the government of the Republic of Cuba has reported that the Gross Domestic Product (GDP) increased 1.5% as measured on an annual basis, from January 1997 through June 1997" is not accurate. The government of the Republic of Cuba has not reported the 1.5% figure. The figure should have been attributed to "various Republic of Cuba government and non-Republic of Cuba government sources." Second, in the item CITY OF HAVANA REPORTS MODEST ECONOMIC INCREASE on page two, the statement that "the city of Havana reported a January 1997 through April 1997 economic increase of 17%" is not accurate. The statement should have read that "the city of Havana reported a January 1997 through April 1997 economic increase of 4.7%, or 7% less than planned. Food services increased 17%."
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