EXCHANGE RATES SURPRISINGLY STABLE- Republic of Cuba government-operated Cajas de Cambio S.A. (CADECA) purchased the U.S. Dollar for 23 Pesos across the country and sold the Convertible Peso, equal to one U.S. Dollar, for 23 Pesos in the city of Havana and tourism resort area of Varadero; and from 23 Pesos to 25 Pesos in the provinces. Havana residents continued to actively exchange U.S. Dollars for Pesos. The U.S. Dollar began August 1997 trading for 21 Pesos to 22 Pesos. Historically, the Peso has strengthened in value, not weakened in value, during the month of August. The U.S. Dollar exchanged for 120 Pesos at the beginning of August 1994 and exchanged for 80 Pesos at the end of August 1994; exchanged for 35 Pesos at the beginning of August 1995 and exchanged for 15 Pesos at the end of August 1995; exchanged for 25 Pesos at the beginning of August 1996 and exchanged for 22 Pesos at the end of August 1996. CADECA began 1997 exchanging the U.S. Dollar for 19 Pesos (buy) and 20 Pesos (sell) in Havana and in Varadero; and for 20 Pesos (buy) and 21 Pesos (sell) in the provinces. 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 U.S. Dollar circulate freely in Cuba.
FIRST COMMERCIAL OFFICE BUILDING UPDATE- La Lonja del Comercio, the first joint venture to renovate and operate a commercial office building in the Republic of Cuba since the 1959 revolution, has almost thirty tenants. On 25 October 1995, H.E. Eusebio Leal, representing the Office of the Historian of the City of Havana, and Spain-based Argentaria Bank established a joint venture, Aurea La Inmobiliaria, to finance, promote, and develop this US$18 million capital project in the Plaza de San Francisco in Old Havana, fifty yards from the Port of Havana waterfront and directly behind the recently-renovated, with an Italy-based company, passenger ship terminal. After less than one year in operation, tenants include: Business International (Venezuela-based company producing and marketing office furniture, movable walls, and other office-related products; the company has an agreement to produce products in one of the Republic of Cuba's free trade zones); ETECSA (the Old Havana office of the Republic of Cuba-based and Republic of Cuba government-controlled joint venture telephone company); Womy Trading (Holland-based trading company); Shell Caribbean (Anglo-Dutch energy company); Transnico (Belgium-based travel company); Saena (Italy-based company marketing hydraulic connections and solar panels); Mitel (Canada-based communications products company); Inpetrol (Venezuela-based industrial paper products company); Cuba Autrement (France-based travel company); Tognozzi (Italy-based construction company with a joint venture in real estate and a hotel); Walkengland (United Kingdom-based travel company); Coempar (Brazil-based agriculture equipment company); Aec (Holland-based financial consulting company); Saratoga (United Kingdom-based company with a joint venture hotel project in Old Havana); Mendez & Carrasco (Spain-based construction materials company); Sipac (Spain-based company with an economic association to provide corrosive protection products); Bicamex (United Kingdom-based); Grupo Domos (Mexico-based company formally a minority investor in ETECSA); Meiwa (Japan-based electronics company); Societe General (France-based financial institution); Alacatel (France-based communications equipment company); Astilleros de La Isla (Uruguay-based company with economic association to construct catamarans and to repair vessels). The building also has a post office/business center (within which individuals can rent post office boxes for US$8.00 per month) and a restaurant. The Republic of South Africa is considering leasing an entire floor of the building for use as an embassy.
HAVANA'S FIRST 24 HOUR GOURMET RESTAURANT- Cafe El Mercurio, owned by Republic of Cuba government-operated Habaguanex S.A., and located in La Lonja del Comercio, the first renovated joint venture commercial office building in the Republic of Cuba since the 1959 revolution, is the island's newest must-visit restaurant. Under the direction of Head Chef Mr. Eduardo Arauz, the restaurant has quickly become known for the value of its pricing, the quality of its food, the size of its portions, and for being open 24 hours each day. A platter of grilled asparagus, Spanish ham, and eight large cooked shrimp over a mixture of fresh greens (including bean sprouts and rose peddles) is US$8.00. For US$2.50, two scoops of ice cream arrive at the table in a pineapple canoe surrounded by sliced fruit (pineapple, mango, papaya, guava) shaped like waves. Mr. Arauz, who is constantly visiting with patrons, will basically prepare whatever a customer desires. A piano player provides entertainment along with Coto, the resident parrot who will visit customer's tables- and even sit on their shoulders.
THE ARRIVAL OF DISCOUNT CIGAR PRICING- The concept of discount pricing has reached the retail tobacco sector in the Republic of Cuba. Cubanacan, S.A., a Republic of Cuba government-operated tourism company, has established Amazonas, a new tobacco, rum, and coffee retail store in a newly-renovated small "strip mall" at Calle 12 e/ 23 y Zapata in Havana. Cubanacan, which also manages the retail tobacco store at the Partagas Factory that is known for having generally higher prices than at other retail tobacco stores, has authorized the discounting of certain of the less popular cigar brands. According to one manager, "discounting is a way to get people to visit a new store." Some of the brands are discounted up to 25%. Amazonas, open for three weeks, is a small store with a bar, on-the-premise cigar roller, and lounge area. The staff is extremely pleasant and knowledgeable. The Ministry of Finances and Prices of the Republic of Cuba establishes official prices for retail tobacco products. Individual retail stores generally then establish their prices approximately 5% under or approximately 5% over the official prices.
IMPORTED WINES AND SPIRITS SECTOR UPDATE- In a discussion with Mr. Enrico Garzaroli, President of Wines and Spirits Distributors, Inc., one of the largest importers of wines and liquors to the Republic of Cuba, he reported that revenues from January 1997 to August 1997 have already equaled the revenues for all of 1996. There was a nearly 60% increase in revenues in 1996 over revenues from 1995. Of significant interest this year is the fact that the company has sold 2,000 cases of champagne, including 400 cases of the expensive Dom Perignon brand. The increase in the sales of premium wines and spirits seems to be primarily coming from Republic of Cuba nationals as the demographics of tourists visiting the Republic of Cuba are not consistent with such expenditures. Wines and Spirits Distributors, Inc., activities within the Republic of Cuba include exclusive distribution of Heineken Beer from Holland and President brand butter from France; sponsorship of events such as the Copa Heineken '97 tennis tournament and the 30th anniversary of the Cohiba brand cigar dinner; and distribution of products sold in 14 liquor stores owned by Republic of Cuba government-operated Caracol S.A.. Mr. Garzaroli, who also owns the renowned Graycliff restaurant and hotel in Nassau, Bahamas, is also involved with other ventures in the Republic of Cuba including the island's first winery; establishment of a Sommelier Association (200 members) and Bartenders Association (200 members) with chapters in Havana, the tourism resort area of Varadero, and in the island's second largest city, Santiago de Cuba. Prizes have been awarded for the best restaurant wine list to Le Select and to Le Pedragal, each with 300 selections. The Sommelier Association awarded seven Republic of Cuba nationals with visits to Europe, where one participant correctly selected four wines out of eight in a blind tasting. Mr. Garzaroli is currently assisting the Ministry of Fisheries of the Republic of Cuba as it prepares to inaugurate Le Cangrejo (The Crab) in the Miramar District of Havana. The restaurant will have a salt water pool from which customers can select their meal.
CIGAR AFICIONADO IS FASTEST SELLING MAGAZINE- During each of the last three months, the English-language Cigar Aficionado magazine, published by New York City-based M. Shanken Communications, has received double-digit percentage increases in the number of issues ordered by World Services Publications (WSP), a subsidiary of Republic of Cuba government-operated Cimex Corporation, providing the magazine with the fastest growth of any United States-produced publication distributed throughout the Republic of Cuba. The Cuban Democracy Act signed into law in October 1992 permits the exportation and importation of informational materials. The October 1997 issue of Cigar Aficionado magazine has a multi-page pictorial feature on Argentinean-born Dr. Ernesto "Che" Guevara written by journalists from Republic of Cuba government-controlled Prensa Latina News Agency.
PRESIDENT CASTRO MEETS MEMBERS OF CONGRESS AND STAFFS- H.E. Dr. Fidel Castro, President of the Republic of Cuba, met on 28 August 1997 with The Honorable Thomas Campbell (R- California) and The Honorable Marshal Sanford (R- South Carolina), along with staff members from the offices of The Honorable Esteban Torres (D- California) and The Honorable James McDermott (D- Washington).
PAPAL VISIT UPDATE- Archbishop of Havana Cardinal Jaime Ortega reported that preparations for the visit of His Holiness John Paul II to the Republic of Cuba from 21 January 1998 to 25 January 1998 were proceeding as scheduled. The Pope is expected to conduct outdoor masses in: Santa Clara, 270 kilometers east of Havana, on 21 January 1998; Camaguey, 533 kilometers east of Havana, on 22 January 1998; Santiago de Cuba, 869 kilometers east of Havana, 23 January 1998; Havana's Plaza de la Revolucion, 25 January 1998. The Pope is expected to meet with H.E. Dr. Fidel Castro Ruz, President of the Republic of Cuba, on 24 January 1998, along with religious workers, cultural leaders, and others. The Archdiocese of New York City reported that it had received authorization from the Government of the United States and from the Government of the Republic of Cuba to send a 300-member delegation, led by Cardinal John O'Connor, to the island in conjunction with the visit of the Pope. A similar delegation is expected from Boston, Massachusetts, and Miami, Florida. The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, D.C., has licensed the Archdiocese of Miami to charter a 1,200-passenger cruise ship which will sail from the United States to the Republic of Cuba. Various Republic of Cuba-based and non-Republic of Cuba-based estimates have predicted that 10,000 to 15,000 individuals of Cuban descent and other interested individuals will seek to visit the Republic of Cuba during the visit of the Pope, along with perhaps 4,000 journalists from throughout the world.
HAVANATUR OFFERING PAPAL VISIT PACKAGES- Havanatur, S.A., the agency of choice for individuals subject to United States law who are traveling to the Republic of Cuba, has announced the availability of special airfare, hotel, and transfer packages for travel from 15 January 1998 through 31 January 1998, to coincide with the scheduled visit of His Holiness Pope John Paul II to the Republic of Cuba. Havanatur is a subsidiary of Republic of Cuba government-operated Cimex Corporation, the largest conglomerate on the island having subsidiaries in tourism, shipping, transportation, retail, banking, free trade zone administration, and consulting. The packages must be confirmed before 15 October 1997 and payment must be received by 30 November 1997. Telephone: 011 53 7 24 1898. Facsimile telephone number: 011 53 7 24 2681. Ask for Mrs. Ofelia Diaz, Mr. Joel Sanz, or Mrs. Claudia Albor.
CORRUPTION LAW GOES INTO EFFECT- Decree Law No. 175 which expands and modifies the penal code of the Republic of Cuba to increase the punishment of "white collar" crimes, exploitation of prostitution, and the abuse of minors, when into effect on 25 August 1997. The crimes of influence peddling, tax evasion, and the conducting of illegal business activity by public officials, were added to the penal code by imposing sentences of up to fifteen years in prison. For the first time, managers of Republic of Cuba government-operated companies can be held legally accountable for the actions of the companies they manage, including improper security measures and waste or loss of material resources. Sentences for various "white collar" crimes have been increased by imposing sentences of up to twenty years in prison in cases where serious damage to the economy was a result of the crime. Directly or indirectly benefiting from prostitution is now punishable by prison sentences ranging from two to eight years, sexual abuse of a minor by prison sentences of up to twenty years, and the use of minors to beg from two to eight years in prison. Monetary fines were also increased significantly.
UNITED NATIONS COMMISSION ECONOMIC REPORT- The United Nations' Economic Commission for Latin America in its report, "Evolution of the Cuban Economy in 1996," states that "Cuba will continue to balance its macro-economic indicators." The report said that the 1994, 1995, and 1996 rate of increases in the Gross Domestic Product (GDP) should not be expected to continue due to the island's continuing shortage of U.S. Dollars and lack of access to global capital markets.
BUDGET UPDATE- The National Tax Office (NTO) of the Republic of Cuba reported January 1997 through July 1997 revenues of 7.37 billion Pesos, 270 million Pesos more than planned. Sources within the Ministry of Finances and Prices of the Republic of Cuba report that Peso expenditures were also as planned. The Republic of Cuba's 1997 budget included a deficit of 470 million Pesos, or 1.9% of Gross Domestic Product (GDP), based on planned revenues of 12.143 billion Pesos and expenditures of 12.613 billion Pesos. The government continues to have a severe shortage of U.S. Dollars necessary to pay for financing and imports such as oil, food and health care products.
INCOME TAX UPDATE- The National Tax Office (NTO) of the Republic of Cuba reported that auditors have uncovered more than 300 million Pesos in taxes due from Republic of Cuba government-operated companies. The NTO said that audits of more than 100,000 of the self-employed income tax returns generated 12 million Pesos in taxes due. The NTO recently issued a list of fifty Republic of Cuba government-operated companies which together owed 190 million Pesos in back taxes. The NTO said that the bank accounts of eight of the companies were frozen, with the exception of wage accounts. Other companies were warned of pending action, and still others had agreed to payment plans. The National Assembly of the Republic of Cuba enacted a comprehensive income tax law in 1994 which required that Republic of Cuba government-operated companies gradually shift from being a part of the national budget to being quasi-independent entities that functioned on the basis of profit and loss, payroll, bank credits, and taxes. The NTO said that 1,194 national companies and 263 Republic of Cuba local government companies were incorporated for the first time this year into the income tax system. Unclear is whether any managers of Republic of Cuba government-operated companies with income tax delinquencies will be sanctioned under provisions of recently-enacted Decree Law No. 175.
PRIVATE SECTOR REGISTRATIONS DECLINE- The National Tax Office (NTO) of the Republic of Cuba reported that the number of self-employed family-operated businesses declined by more than 4,500 in July 1997, leaving 176,173 registered self-employed family businesses compared with 210,000 eighteen months ago. The government of the Republic of Cuba has legalized approximately 150 classifications of self-employment, most of which are family-operated businesses. Registrations, ranked by greatest numbers, are the food service sector, transportation sector, household and personal services, and arts and crafts. NTO officials said that the decline in registrations was due to higher monthly license fees, new prohibitions; restrictions against home and apartment rentals, and increased regulation.
TOURISM UPDATE- H.E. Osmany Cienfeugos, Minister of Tourism of the Republic of Cuba, reported that the tourism sector consolidated its position as the island's largest U.S. Dollar generator, with gross 1996 revenues of US$1.45 billion, US$100 million above the revenue figure most recently announced, and equal to the combined revenues of the island's two most significant exports, sugar and nickel plus cobalt. Minister Cienfeugos said that sixteen tourism areas were under development on the island, of which eight had priority, and he said that the island could, without harming the environment, handle the operation of 150,000 hotel and motel rooms. There are currently 27,000 hotel and motel rooms in operation on the island, although most are not of high quality. The number of hotel and motel rooms is expected to increase to between 40,000 and 45,000 by the year 2000, which is 5,000 to 10,000 less than was previously announced.
TOURISM INVESTMENT UPDATE- H.E. Eduardo Rodriguez de la Vega, Vice Minister of Tourism of the Republic of Cuba, said that the annual investment in the tourism sector was US$400 million. Minister de la Vega made the statement during the announcement of the latest joint venture, between Germany-based Oger Tours and Republic of Cuba government-operated Gran Caribe, that will construct two hotels, one with 1,000 beds at the tourism resort area of Cayo Coco, located off the northern coast of Ciego de Avila, 450 kilometers east of Havana. Minister de la Vega said that there were currently twenty-one joint ventures in the tourism sector, with committed capital of US$606 million, that operated 2,500 hotel rooms. Another 8,768 hotel rooms are being considered or are under construction, with additional joint ventures being negotiated that would operate 10,000 hotel rooms.
HEAVY MACHINERY CONVERSION UPDATE- The Republic of Cuba government-operated Unecamoto Corporation reported that it would install 10,000 new tractor and truck motors during the next twelve months. The motors were purchased from Mercedes Benz, Scania, and Volvo. Unecamoto reported that 1,500 sugar combines have already received new motors. Unecamoto, which is controlled by the Ministry of the Steel, Mechanical, and Electronic Industry of the Republic of Cuba, known as SIME, is replacing motors obtained from the former U.S.S.R. and former U.S.S.R.-dominated countries with more efficient motors and also manufacturing radiators, pistons, filters, and other spare parts in conjunction with non-Republic of Cuba companies. Unecamoto has five divisions, twenty-three companies, three joint ventures, and several economic associations and cooperation agreements with non-Republic of Cuba companies.
STEEL SECTOR UPDATE- The Antillana de Acero Steel Works in Havana Province reported January 1997 through June 1997 production of 117,714 tons, an increase of 7% compared with the same period in 1996. Antillana de Acero is the island's largest steel works, followed by the Acinox Steel Works in Las Tunas Province, 650 kilometers east of Havana, which reported January 1997 through June 1997 production of 40,000 tons, compared with 20,000 tons during the same period in 1996. Both Republic of Cuba government-operated steel works have a capacity of producing 750,000 tons (Antillana de Acero 600,000 tons and Acinox 150,000 tons) and both were upgraded and expanded with the support of the former U.S.S.R., producing a record 400,000 tons of steel products in 1989, all for domestic use. The Ministry of Steel, Mechanical, and Electronics Industry of the Republic of Cuba, known as SIME, reported that January 1997 through June 1997 production was 85% of plan and production was expected to increase to 330,000 tons in 1997, compared with 230,000 tons in 1996, and 180,000 tons in 1995. SIME reported overall product exports of US$50 million from January 1997 through June 1997; and sources report that export contracts valued at US$100 million are confirmed for steel bars, steel rods, steel cables, and other products, mainly to clients in Caribbean Sea-area countries and in Latin American countries.
FISHING SECTOR UPDATE- H.E. Orlando Rodriguez Romay, Minister of Fishing Industry of the Republic of Cuba, said that the January 1997 through August 1997 fresh water catch was 30,000 tons, a 9,000 ton increase from the same period in 1996. He said that fresh water fish breeding would produce 60,000 tons in 1997, an increase of 10,000 tons from 1996. Fishing industry experts report that the fresh water catch increased significantly from October 1996 through December 1996. There are currently 660 hectares dedicated to fresh water fish breeding and production, with plans for 1,000 hectares to be utilized by 1998.
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Rice (LB) |
Havana
5 (6) |
Camaguey
5 (4.5) |
Santiago de Cuba
6-7 (7) |
CANADA DONATES COOKING OIL- The government of Canada has donated approximately US$2.8 million worth of cooking oil to the Republic of Cuba. The Honorable Keith Christie, Canada's new Ambassador to the island, reported that his government was ready to continue and to increase humanitarian assistance and technical assistance. Canada has donated millions of U.S. Dollars worth of humanitarian, development, and technical assistance during the last five years. The Republic of Cuba is Canada's most important Caribbean Sea-area country and Central American country trading partner. Companies from Canada are responsible for more investment in the Republic of Cuba than any other country. The number of tourists visiting the Republic of Cuba from Canada continues to increase.
Tuesday, 30 September 1997, 12:00 p.m., Location To Be Announced
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