ECONOMIC EYE ON CUBA©

ECONOMIC EYE ON CUBA© Index


13 April 1998 to 19 April 1998


Exchange Rates Remain Stable
National Bank Of Cuba Exchange Rates
US Airways Gives Passengers Credit For Cuba Mileage
Cuba Interested In United States Health Care Products
Cuba Declares Itself Free Of Measles
Vaccine Update
Iran And Iraq To Purchase Pharmaceuticals And Medical Equipment
For Sale: Race Horses, Buffalo Meat, And Alligator Skin
Trinidad Cigar Brand Inching Toward United States
ACP Group Grants Cuba Observer Status
Sugar Production Declines At Least 20%
Gross Domestic Product Could Decline In 1998
Sugar Production Reduction Could Increase Trade Deficit
Canadian Prime Minister To Visit
Alternative Energy Use Gaining
Self-Employed Win Appeal Process
Private Restaurant Update
Cape Verde President Feels Confident After Visit
Canary Islands President Arrives
USCTEC Speaking Schedule




EXCHANGE RATES REMAIN STABLE- Republic of Cuba government-operated Cajas de Cambio S.A. (CADECA) sold the Convertible Peso, equal to one U.S. Dollar, for 21 Pesos and purchased the U.S. Dollar for 19 Pesos, as it has since 1 April 1998. CADECA had purchased the U.S. Dollar for 20 Pesos and sold the U.S. Dollar for 22 Pesos from 12 March 1998 to 31 March 1998. CEDECA purchased the U.S. Dollar for 21 Pesos and sold the U.S. Dollar for 23 Pesos from 11 February 1998 to 11 March 1998. CADECA purchased and sold the U.S. Dollar for 23 Pesos from August 1997 through 10 February 1998. CADECA began April 1997 purchasing the U.S. Dollar for 26 Pesos and selling the U.S. Dollar for 26 Pesos. In April 1995, the U.S. Dollar could be purchased on the unofficial market for 40 Pesos, as CEDECA did not yet exist. 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 the Republic of Cuba.

NATIONAL BANK OF CUBA EXCHANGE RATES- The following are the biweekly official exchange rates between the Republic of Cuba Convertible Peso, equal to one U.S. Dollar, and selected international currencies as of 17 April 1998. The National Bank of the Republic of Cuba cautions that these rates do not necessarily reflect the exchange rates at all Republic of Cuba government-operated banks as each bank is authorized to establish its own exchange rates.
Country and Currency
Austria- Shilling
Denmark- Krone
Norway- Krone
Sweden- Krona
Australia- Dollar
Canada- Dollar
United States- Dollar
Portugal- Escudo
The Netherlands- Guilder
Belgium- Franc
France- Franc
Switzerland- Franc
United Kingdom- Pound Sterling
Italy- Lira
Germany- Mark
Finland- Markka
Spain- Peseta
Mexico- Peso
Japan- Yen
Rate of Exchange
.0789
.1456
.1333
.1290
.6495
.6955
1.00
.0054
.4930
.0269
.1656
.6684
1.6848
.0561
.5552
.1821
.0065
.1125
.7724


US AIRWAYS GIVES PASSENGERS CREDIT FOR CUBA MILEAGE- Arlington, Virginia-based US Airways Group, a holding company with annual global revenues exceeding US$8 billion in 1997, and whose primary subsidiary is US Airways, permits the 17 million members of its US Airways Dividend Miles program to accrue mileage for travel to/from/through the Republic of Cuba. While US Airways does not currently provide service to/from/through the Republic of Cuba, and no awards are available for travel to the Republic of Cuba, members of the US Airways Dividend Miles program can accrue mileage to/from/through the Republic of Cuba when traveling on airlines affiliated with LatinPass. LatinPass is a worldwide partner of the US Airways Dividend Miles program (other airline partners include ANA, Qantas, Alitalia, Sabena, Swissair, and Northwest). LatinPass, which has 125,000 members, includes ACES, Avianca, Aviateca, COPA, LACSA, Mexicana, Nica, Saeta, Taca, US Airways, KLM, Avis, American Express Membership Rewards, AT&T True Awards, InterAmerican Rent a Car, Diners Club Rewards, Holiday Inn Worldwide, and Radisson Hotels Worldwide. Since 1962, Delta Air Lines, Continental Airlines, and United Air Lines have had route authorities from the following cities: Delta- Havana to Houston, Los Angeles, New Orleans, San Francisco, and San Juan; Continental- Havana to Fort Lauderdale, West Palm Beach, United- Havana to Miami, Key West, Baltimore, Boston, Dallas, Houston, Los Angeles, New Orleans, New York, Newark, Philadelphia, San Francisco, San Juan, St. Croix, St. Thomas, and Washington, D.C.; and Camaguay to Miami, Baltimore, Boston, Dallas, Houston, Los Angeles, New Orleans, New York, Newark, Philadelphia, San Francisco, San Juan, St. Croix, St. Thomas, and Washington, D.C.

CUBA INTERESTED IN UNITED STATES HEALTH CARE PRODUCTS- H.E. Dr. Carlos Lage, a Vice President of the Council of State of the Republic of Cuba, who is also a physician, said that the recent decisions by the government of the United States to simplify the licensing of health care exports (sales) to the Republic of Cuba were positive. "The country is ready to purchase these products . . . ," said the Vice President. Separately, on 6 April 1998, PWN Exhibicon International L.L.C., a member of the U.S.-Cuba Trade and Economic Council, reported that it had received the first license from the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, D.C., to organize within the Republic of Cuba a Trade Show for United States Medical Equipment and Health Care Products. Approximately 130 United States-based companies have expressed interest in participating in the trade show. Individuals who would be qualified to participate in the trade show include executives and representatives from United States companies that manufacture, distribute, market, and retail, health care sector informational materials, medical equipment, medical instruments, medical supplies, medicated products, medicines, and pharmaceuticals. The trade show will be an opportunity for United States health care sector companies to directly 1) provide informational materials and demonstrate products 2) meet with officials of Ministry of Public Health (MINSAP) and MediCuba (the entity under the auspices of MINSAP which coordinates the importation and exportation of health care products), and 3) meet with administrators of hospitals and clinics and with physicians and nurses of hospitals and clinics from throughout Cuba who provide services to the country's 11 million citizens. For information regarding trade show participation, sponsorship, costs, and dates, please contact Mr. Peter W. Nathan at (203) 222-8660 or by facsimile at (203) 222-8335.

CUBA DECLARES ITSELF FREE OF MEASLES- The Ministry of Public Health of the Republic of Cuba declared that the last confirmed case of German Measles was reported in April 1995, thus making the Republic of Cuba the first country in the world to have no cases of the disease. The Republic of Cuba manufactures a vaccine for German Measles with technology and ingredients imported from Canada and from countries within Europe. Children within the Republic of Cuba receive vaccines for fourteen common childhood diseases. The Ministry of Public Health of the Republic of Cuba also reported that polio has been eliminated and that the frequencies of other diseases, such as meningitis, have been reduced.

VACCINE UPDATE- Ms. Concepcion Campa, Director of the Finlay Institute, and the creator of the Republic of Cuba's Meningitis B vaccine, reported that there were currently twenty-seven vaccines in clinical trials. Ms. Campa said that three of the world's proven vaccines were created within the Republic of Cuba and that more than 40 million doses of Meningitis B vaccine have been exported, mainly to countries within Latin America.

IRAN AND IRAQ TO PURCHASE PHARMACEUTICALS AND MEDICAL EQUIPMENT- H.E. Dr. Mohammed Farhdi, Minister of Public Health of Iran, and Mr. Qusai Al-Kyayat, Director General for Technical Affairs of the Ministry of Health of Iraq (who accompanied a delegation led by H.E. Hikmat Ibrahim Al Azzawi, Minister of Finance of Iraq) each signed agreements for the purchase of pharmaceuticals and medical equipment produced within the Republic of Cuba. The Republic of Cuba has increased its attention toward countries located in the Middle East, especially Lebanon, Iran, Iraq, Libya, and Saudi Arabia, as export markets for sugar, health care products, citrus, juice, tobacco, shellfish, and other products, and import sources for oil.

FOR SALE: RACE HORSES, BUFFALO MEAT, AND ALLIGATOR SKIN- Republic of Cuba government-operated Alcona S.A., the commercial subsidiary of the National Enterprise for the Conservation of Flora and Fauna of the Republic of Cuba, is exporting fighting roosters, tropical birds, buffalo meat, buffalo milk, buffalo hides, and importing animals, such as race horses, for use on stud farms. Two recent stud farm residents include: Caribbean Rhythm, a Venezuela-born quarter horse who won ribbons at ten shows within the United States, and Colored by Andrew, a United States-born Appaloosa, who was rated one of the ten best Appaloosa's at the 1995 world championships held in Oklahoma.

TRINIDAD CIGAR BRAND INCHING TOWARD UNITED STATES- The Republic of Cuba's newest premium cigar brand, Trinidad, will be launched in at the Mexico City Bankers Club in Mexico on 22 April 1998 and in Canada in May 1998. Republic of Cuba-based sources report that a limited quantity of the Trinidad brand cigar will be supplied to Casa de Habanos retail stores along the Mexico-United States and Canada-United States borders by June 1998, after which the brand will be supplied to Casas de Habanos retail stores located in Caribbean Sea-area countries. The Trinidad brand is currently available in one size, in ceder boxes of 24 or 50. The cost of a box of 24 Trinidad brand cigars is approximately US$350.00 within the Republic of Cuba. The cost of a box of 50 Trinidad brand cigars is approximately US$665.00 within the Republic of Cuba.

ACP GROUP GRANTS CUBA OBSERVER STATUS- The seventy-one member Africa, Caribbean, and Pacific Group (ACP) has granted the Republic of Cuba Observer Status to attend the ACP's Ministerial meeting 4 May 1998 to 6 May 1998 in Barbados, which will prepare for the European Union (EU)-ACP Ministerial meeting 7 May 1998 to 8 May 1998 in Barbados. The EU is expected to approve the Republic of Cuba's attendance at the EU-ACP meeting as well. The two separate meetings will serve as a prelude to formal negotiations for a Fifth Lome Convention. The Lome Convention between the EU and the ACP grants preferential entry into EU markets and annual access to US$17 billion in EU-administered assistance. The World Trade Organization (WTO) opposes preferential trade agreements. The current Lome Agreement expires at the end of 1999 and negotiations for a new agreement begin in May 1998. The Republic of Cuba has requested membership in the ACP and has asked to be included as an observer in the Lome negotiations due to its former colonial status under Spain.

SUGAR PRODUCTION DECLINES AT LEAST 20%- Republic of Cuba-based and non-Republic of Cuba-based experts said that raw sugar production is likely to decrease by at least 20% from 1997's 4.25 million tons. Planned production in 1998 was 3.8 million tons. Currently estimated 1997-1998 sugar harvest (November to May) production is 3.0 to 3.4 million tons. In 1994-1995, the Republic of Cuba produced 3.3 million tons of raw sugar, then the lowest production recorded in more than 50 years. Factors contributing to the decline in production include: 1) cutting sugar cane in 1996-1997 that was for the 1997-1998 harvest 2) with the exception of during the month of May 1998, El Nino weather-related conditions including rain which made mechanized harvesting difficult and high temperatures which reduced cane yields 3) late arrival of spare parts for machinery 4) lack of inputs 5) management and labor problems 6) financing difficulties- interest rates as high as 20% on various loans totaling approximately US$300 million and 7) lack of joint ventures with non-Republic of Cuba-based companies to operate sugar plantations and sugar mills.

Year
1988-1989
1989-1990
1990-1991
1991-1992
1992-1993
1993-1994
1994-1995
1995-1996
1996-1997
1997-1998
Raw Sugar Production (millions of tons)
8.1
8.0
7.6
7.0
4.3
4.0
3.3
4.45
4.25
3.0 to 3.4 (projected)


GROSS DOMESTIC PRODUCT COULD DECLINE IN 1998- The Gross Domestic Product (GDP) declined from January 1998 through March 1998 due to a 20% reduction in raw sugar production, report sources within the Council of Ministers of the Republic of Cuba. In December 1997, H.E. Jose Luis Rodriguez, Minister of Economy and Planning of the Republic of Cuba, estimated that the GDP would increase 2.5% to 3.5% in 1998, an estimate that was, reportedly, based upon a 10% reduction in raw sugar production (from 4.25 million tons to 3.8 million tons) and moderate to strong performances in other sectors, such as tourism. Republic of Cuba-based and non-Republic of Cuba-based sugar sector experts estimate that 1997-1998 raw sugar harvest (November to May) will produce less than 3.4 million tons, which could result in no increase in GDP for 1998 or, perhaps, a decline in GDP for 1998. Net revenues from the tourism sector and received family remittances are the Republic of Cuba's primary sources of U.S. Dollars, while net revenues from sugar exports continue to decrease. The sector remains an important generator of secondary production, contributing factor to GDP, and second-largest employer (after non-sugar agriculture). At the end of 1996, the government of the Republic of Cuba estimated that the GDP would increase 4% to 5% in 1997. For 1997, the government of the Republic of Cuba reported that most sectors reported a 10% to 15% increase in production, while sugar reported a decline in production of approximately 4% and vegetable production declined 6%. The small reductions in production by sugar and vegetables resulted in the GDP increasing by 2.5%, almost 50% less than planned.

SUGAR PRODUCTION REDUCTION COULD INCREASE TRADE DEFICIT- Republic of Cuba-based and non-Republic of Cuba-based experts expect foreign trade to decline in 1998 due to the estimated 20% decrease in raw sugar production and decrease in global commodity prices for other exports, such as nickel and gold. In December 1997, the government of the Republic of Cuba reported that non-sugar exports had increased 15%, but when raw sugar production was included, overall exports increased by less than 1% due to an approximate 4% decline in sugar production. The cost of imports for the Republic of Cuba, however, such as oil, the largest import, could decrease as oil prices continue to be, in some cases, 40% less than in October 1997. Revenues are expected to increase in 1998 from tourism and family remittances (which are again authorized from the United States at US$1,200.00 per year per person), and from exports such as shellfish, citrus, tobacco, and non-nickel minerals and metals. Foreign Trade in billions of U.S. Dollars:

Billions Of US$
Exports
Imports
Total Trade
Deficit
1994
1.3308
2.0168
3.1649
-.851.5
1995
1.4916
2.8825
4.3741
-1.3909
1996
1.8496
3.6103
5.4599
-1.7607
1997
1.8607
4.3288
6.1895
-2.4681


CANADIAN PRIME MINISTER TO VISIT- The Honorable Jean Chretien, Prime Minister of Canada, is expected to arrive in the Republic of Cuba on 27 April 1998 for a one-day visit to meet with H.E. Dr. Fidel Castro Ruz, President of the Republic of Cuba. The last visit to the Republic of Cuba by a Prime Minister of Canada was in 1976. Canada will host the third Summit of the Americas which took place in Santiago, Chile, from 18 April 1998 to 19 April 1998.

ALTERNATIVE ENERGY USE GAINING- Mr. Luis Berriz, President of the Cuban Society for the Promotion of Renewable Energy Sources (CUBASOLAR), reported that non-fossil fuels, water, and solar, accounted for 30% of the energy produced within the country in 1997. Mr. Barriz said that non-fossil fuels would continue to gain importance, especially from such sources as sugar cane refuse. Sugar mills located throughout the Republic of Cuba increasingly use generators powered by sugar cane refuse. Several Europe-based companies are developing new proposals to use sugar cane refuse to provide energy for power plants. In Guantanamo Province, 910 kilometers east of the city of Havana, 57% of the energy consumed is generated by small hydroelectric plants and by solar panels. There are approximately 200 small water-powered generators located within the Republic of Cuba, 65 of which, including the largest, are located in Guantanamo Province. Hundreds of homes, schools, clinics, and other facilities, especially those located in mountainous regions, use solar panels. Solar panels are increasingly being used in tourism facilities. Many farm cooperatives use windmills to power irrigation and other equipment. During his November 1995 visit to New York City, H.E. Dr. Fidel Castro Ruz, President of the Republic of Cuba, had a conversation with one prominent United States business executive whose home in California uses solar panels to provide energy. President Castro eagerly accepted an invitation to visit the home.

SELF-EMPLOYED WIN APPEAL PROCESS- The National Tax Office (NTO) of the Republic of Cuba has announced the implementation of regulation No. 8, which establishes a long-sought appeals process for the 155,538 licensed self-employed Republic of Cuba nationals, out of a total workforce of approximately 4.5 million. There are an estimated 750,000 Republic of Cuba nationals engaging in some form of unlicensed self-employment on a part-time or regular basis. Regulation No. 8 will provide an appeals process if 1) a licensee is fined 2) a licensee has their license revoked or 3) any other alleged violation of regulations by a licensee. Mr. Alejandro Barros, Legal Director of the NTO, reported that the self-employed could now appeal through the highest levels of whatever ministry or ministries govern the issuance of their license(s) and, in some cases, through the courts. 157 types of self-employment have been authorized since 1993.

PRIVATE RESTAURANT UPDATE- The National Tax Office (NTO) of the Republic of Cuba reported that the operation of home-based 12-seat restaurants (known as Paladares) was the most lucrative of all reported revenue earners. The NTO reported that those restaurants located near tourism areas reported gross revenues of 500,000 Pesos per year, compared with 106,400 Pesos for those restaurants located in other areas. The NTO reported that the highest-earning licensed self-employed Republic of Cuba nationals included taxi drivers, barbers, contractors, and artisans.

CAPE VERDE PRESIDENT FEELS CONFIDENT AFTER VISIT- H.E. Manual Mascrenha Gomez Madeiro, President of Cape Verde, said that he expected economic relations to improve as a result of his 13 April 1998 to 16 April 1998 visit to the Republic of Cuba. The President said that he expected expanded opportunities in health care, education, fishing, transportation, trade, and technical assistance.

CANARY ISLANDS PRESIDENT ARRIVES- His Excellency Manual Hermoso Rojas, President of the Spanish Autonomous Region of the Canary Islands, arrived in the Republic of Cuba on 18 April 1998 leading a delegation of business executives. The majority of Republic of Cuba nationals of Spanish descent trace their ancestry to the Canary Islands.

USCTEC SPEAKING SCHEDULE- Mr. John S. Kavulich II, President of the U.S.-Cuba Trade and Economic Council, is to participate at the following event: 29 May 1998- Luncheon co-sponsored by The Cuban Studies Institute at Tulane University in New Orleans, Louisiana, and the World Trade Center of New Orleans, Louisiana. For information telephone 504-862-8000 extension 2601.



ECONOMIC EYE ON CUBA© is published each Monday for members of the U.S.-Cuba Trade and Economic Council, the largest nonpartisan business organization within the United States focusing upon the Republic of Cuba. The organization is a private, not-for-profit corporation which does not take positions with respect to United States-Republic of Cuba political relations. All rights reserved. Material may not be reproduced without written permission.


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