ECONOMIC EYE ON CUBA©

ECONOMIC EYE ON CUBA© Index


11 May 1998 to 17 May 1998


Exchange Rates Unchanged
National Bank Of Cuba Exchange Rates
German Debt Near Resolution
EU Funds Business Center In Havana
Nickel Plus Cobalt Update
Commodity Import Update
United States Company Promoting Treatment Also Tested In Cuba
Chilean Company Producing Propylene Hydraulic Systems In Cuba
United States Citizens Participate In Tourism Convention
Record Number Of Contracts Signed At Tourism Convention
Italian Hotel Venture Established
Cruise Ship Update
Air France To Begin Direct Flights In June
Cubana Airlines To Begin Tokyo Flights
Foreign Ministers Of Botswana And Mali Conclude Visits
Brazil Foreign Minister To Visit
King Of Spain Visit Update
Updated Speaking Schedule



EXCHANGE RATES UNCHANGED- 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. The U.S. Dollar on the informal market increased from as low as 18 Pesos three weeks ago to 20 Pesos. 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. CADECA 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 CADECA 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 22 March 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
.0797
.1474
.1337
.1296
.6253
.6901
1.000
.00055
.4984
.0272
.1674
.6747
1.6293
.0569
.5614
.1848
.0066
.1118
.7457


GERMAN DEBT NEAR RESOLUTION- H.E. Heinrich Kolb, Secretary of State for Economic Affairs of Germany, reported that he expected a resolution soon of the Republic of Cuba's debt to Germany. Secretary Kolb, who spent four days last week visiting the city of Havana, said that resolving the issue of the debt was essential to the implementation of an Investment Protection and Promotion Agreement which was signed in May 1996 and is due to become effective within the next few weeks. Secretary Kolb said that "many German firms want to invest and trade here, but need financing and credits to do so. For that, we have to settle the debt. The talks were positive and I think they'll see results in a very short time." The Republic of Cuba's short term and medium term debt to Germany is approximately US$70 million. The Republic of Cuba's long term debt to Germany is approximately US$220 million, 2.2% of the Republic of Cuba's total foreign debt of approximately US$10 billion. The US$220 million amount does not include approximately 850 million Transferable Rubles to the former German Democratic Republic. Secretary Kolb said that the issue of the Transferable Ruble debt was the most significant bilateral debt-related problem. The Republic of Cuba recently reached an agreement to settle US$750 million in commercial debt owed to companies in Japan. Since 1990, announced foreign investment within the Republic of Cuba by Germany-based companies is approximately US$10 million, while committed/delivered foreign investment within the Republic of Cuba by Germany-based companies is approximately US$2 million. Most of the foreign investment is through third-country subsidiaries. Approximately 130,000 German nationals are expected to visit the Republic of Cuba in 1998 with a projected 250,000 German nationals visiting by the year 2000.

EU FUNDS BUSINESS CENTER IN HAVANA- The European Union (EU) has provided funding for Euro-Center, which was inaugurated last week by Mr. Carlos Salsamendi, President of the Chamber of Commerce of the Republic of Cuba. Euro-Center's purpose is to develop commercial relationships between companies located in EU-member countries and Republic of Cuba-based companies.

NICKEL PLUS COBALT UPDATE- The Ministry of Basic Industry of the Republic of Cuba reported that the island's three operating nickel plants produced an additional 2,500 tons of nickel from January 1998 through April 1998 compared with the same period in 1997. The Republic of Cuba plans to produce 68,000 tons of nickel plus cobalt in 1998, compared with 60,000 tons of nickel plus cobalt in 1997. The government of the Republic of Cuba and Toronto, Canada-based Sherritt International Corporation are partners in Moa Nickel S.A., which owns one of the three operating nickel plants on the island, as well as, a nickel plus cobalt refinery in Fort Saskatchewan, Alberta, Canada. Most Republic of Cuba-mined nickel is shipped to Canada for refining and is then sold by Moa Nickel S.A.. Republic of Cuba-produced nickel is considered to be Class II with an average 90% nickel content. The Republic of Cuba supplies 10% of the world's cobalt. The National Minerals Resource Center (NMRS) of the Republic of Cuba reported that Holguin Province, 800 kilometers east of the city of Havana, had 34% of the world's known nickel plus cobalt reserves, or approximately 800 million tons of proven nickel plus cobalt reserves, and another 2.2 billion tons of probable nickel plus cobalt reserves. The NMRS reported that there are lesser-known reserves of nickel plus cobalt in other parts of the Republic of Cuba.

COMMODITY IMPORT UPDATE- 10,500 tons of flour are being transported to the Republic of Cuba by ship from the French port of Rouen. 28,000 tons of wheat are being transported to the Republic of Cuba by ship from the French port of Rouen.

UNITED STATES COMPANY PROMOTING TREATMENT ALSO TESTED IN CUBA- Fairfield, New Jersey-based BioTherapies, Inc., a dietary supplement company, has reported that shark cartilage may provide value in seeking methods to inhibit new blood vessel growth (angiogenesis) in disease. BioTherapies markets Cartilade as the only patented, natural antiangiogenic product available for purchase. Cartilade was used in an extensive trial at the University of Havana in the Republic of Cuba where positive results were reported in the treatment of cancer.

CHILEAN COMPANY PRODUCING PROPYLENE HYDRAULIC SYSTEMS IN CUBA- Plastimec, a Chile-based company, and Saladillo S.A., a company under the Ministry of Steel, Mechanical, and Electronic Industry (SEME) of the Republic of Cuba, are producing propylene hydraulic systems (mainly for the production of high-resistance tubing) under the auspice of a joint venture.

UNITED STATES CITIZENS PARTICIPATE IN TOURISM CONVENTION- Among the 1,100 registered delegates to the 19th International Tourism Convention (Cuba '98) held at the PABEXPO convention center in the city of Havana from 11 May 1998 to 15 May 1998, were 34 individuals subject to United States law representing United States-based travel agents, tour operators, and hotel companies. Organizers of the event reported that this was the first time in memory that individuals subject to United States law had participated in the event as registered delegates, although there had always been individuals subject to United States law who had attended the event as observers.

RECORD NUMBER OF CONTRACTS SIGNED AT TOURISM CONVENTION- Organizers of the 19th International Tourism Convention (Cuba '98) held at the PABEXPO convention center in the city of Havana from 11 May 1998 to 15 May 1998 reported that 99 contracts were signed for 9,568 rooms- or 1,539,157 tourists for 1999. H.E. Eduardo de la Vega, Vice Minister of Tourism of the Republic of Cuba, reported that 523,000 tourists visited the island from 1 January 1998 through 10 May 1998, thus within range of the planned 1,430,000 tourists expected to visit the Republic of Cuba in 1998, compared with 1,170,000 tourists visiting the Republic of Cuba in 1997. The number of tourists visiting the Republic of Cuba from January 1998 through March 1998 increased 10.4% compared with the same period in 1997. For the month of April 1998, the increase was 32% from the same period in 1997. For the first ten days of May 1998, the increase was 34% from the same period in 1997. The Ministry of Tourism of the Republic of Cuba is increasing its focus upon developing off-season tourism during the months of May through September. Minister de la Vega reported that from 1990 through 1997, the number of tourists visiting the Republic of Cuba increased an average of 19.3% annually, earnings increased an average of 29.3% annually, and the number of hotel rooms increased 11.4% annually. Profits increased an average of 33% from 1990 through 1997. By the year 2000, the Republic of Cuba expects to have 40,000 hotel rooms. By the year 2000, the Republic of Cuba expects to have 2.3 million to 2.5 million tourists visit the country. By year 2010, the Republic of Cuba expects to have 64,000 hotel rooms. By the year 2010, the Republic of Cuba expects to have 7 million tourists visit the country on an annual basis, producing gross revenues of US$11.8 billion. The following charts provide information about the Republic of Cuba's tourism industry. All information provided by the Ministry of Tourism of the Republic of Cuba.
Year
1987
1990
1995
1996
1997
1998 (projected)
Rooms
5,000
12,900
24,200
26,876
27,394
28,000
Tourists
293,000
340,300
741,700
1,004,000
1,169,800
1,400,000*
Gross RevenuesUS$
US$145 million
US$243 million
US$1.1 billion
US$1.35 billion
US$1.5 billion
US$2.0 billion

*Last week, organizers of the 19th International Tourism Convention (Cuba '98) reported that 99 contracts had been signed with non-Republic of Cuba-based tour operators for 1,539,157 tourists.

Year

1987
1990
1995
1996
1997
Tourists Per Room
58.6
26.3
30.6
37.4
42.7
Receipts Per Tourist In U.S. Dollars
US$494.80
US$714.00
US$1,483.00
US$1,394.90
US$1,282.27
Receipts Per Tourist Day In U.S. Dollars
Not Available
US$100.00
US$206.00
US$227.00
US$187.50


Hotel and Motel Rooms

Area
Havana
Varadero
South Coast
North Camaguey
North Holguin
South Oriente
Canarreos
North Ciego de Avila
Other
Total
1990
4,197
4,145
432
449
816
868
264
0
1,695
12,866
1991
4,936
5,614
669
739
1,079
1,455
308
0
1,836
16,638
1992
6,624
5,662
632
739
1,043
1,505
308
0
2,189
18,662
1993
6,690
6,641
1,192
952
1,000
1,643
554
458
3,009
22,139
1994
7,318
7,151
1,192
952
1,235
1,567
554
678
2,607
23,254
1995
7,664
7,273
1,374
1,343
1,594
1,737
560
821
1,867
24,233
1996
8,346
8,675
1.049
1,296
1,632
1,725
682
1,521
1,952
26,878
1997
8,459
9,102
1.034
1,296
1,422
1,566
735
1,867
1,913
27,394


Hotel Categories

The Ministry of Tourism of the Republic of Cuba is considered to be generous in the awarding of stars to properties. Most five-star hotels within the Republic of Cuba would be three-star properties within the United States. ( ) represent the number of existing properties in 1997.

Area
Havana
Varadero
South Coast
North Camaguey
North Holguin
South Oriente
Canarreos
North Ciego de Avila
Other
Total
Two Star
11 (10)
8 (6)
4 (4)
3 (2)
3 (4)
3 (3)
0
1 (1)
16 (16)
49 (46)
Three Star
16 (16)
8 (9)
4 (4)
4 (4)
4 (4)
8 (9)
4 (4)
1 (1)
13 (13)
62 (64)
Four Star
17 (19)
18 (18)
3 (3)
1 (2)
4 (4)
3 (3)
4 (4)
4 (2)
3 (3)
59 (56)
Five Star
5 (4)
2 (2)
0
0
0
1 (1)
0
1 (1)
0
9 (8)
Total
51 (47)
36 (35)
11 (10)
8
11 (12)
15 (16)
8 (8)
7 (5)
32 (32)
179 (174)


ITALIAN HOTEL VENTURE ESTABLISHED- Republic of Cuba government-operated Cubanacan S.A. and Italy-based La Cascina and Simest Spa (Italian Society To Aid Investors Abroad) have established a joint venture to construct one 150-bungalow hotel at the resort of Varadero, 140 kilometers east of the city of Havana, and one 250-room hotel on Santa Lucia off the northern coast of Camaguey Province, 500 kilometers east of Havana. The US$18 million project will be funded by Cubanacan S.A. and La Cascina, with Simest Spa having an option to purchase up to 25% of La Cascina's 50% share of the joint venture.

CRUISE SHIP UPDATE- H.E. Eduardo de la Vega, Vice Minister of Tourism of the Republic of Cuba, reported that five cruise ships would begin visiting various ports within the Republic of Cuba in December 1998. Vice Minister de la Vega reported that from January 1998 through 10 May 1998, there had been 39 cruise ship dockings, mainly those of the Club Med II. New cruise ships visiting the Republic of Cuba will include the Aida, the Princess Danae, the Triton, and the Costa Prima. Tour operator Fantastico S.A., a subsidiary of Republic of Cuba government-operated Cubanacan S.A., will be providing passenger handling services for the cruise ships. Minister de la Vega reported that the Ministry of Tourism of the Republic of Cuba requested that cruise ships visiting the Republic of Cuba agree to dock at a minimum of two ports, leave a negotiated percentage of the ship's passengers in the Republic of Cuba for seven days, employ a negotiated number of Republic of Cuba nationals, and use Republic of Cuba-based services.

AIR FRANCE TO BEGIN DIRECT FLIGHTS IN JUNE- Air France has announced that its Paris-Havana flights, operated by 486-seat Boeing 747-200 aircraft, would begin on 21 June 1998.

CUBANA AIRLINES TO BEGIN TOKYO FLIGHTS- Republic of Cuba government-operated Cubana Airlines reported that it would begin in November 1998 to operate Havana-Vancouver (Canada)-Tokyo (Japan) flights using a DC-10 aircraft.

FOREIGN MINISTERS OF BOTSWANA AND MALI CONCLUDE VISITS- The Honorable Modibo Sidibe, Minister of Foreign Affairs of Botswana, and The Honorable Mompati Merafhe, Minister of Foreign Affairs of Mali, have concluded separate visits to the Republic of Cuba.

BRAZIL FOREIGN MINISTER TO VISIT- The Honorable Luiz Felipe Lampreia, Minister of Foreign Affairs of Brazil, is expected to visit the Republic of Cuba on 24 May 1998.

KING OF SPAIN VISIT UPDATE- Media reports indicate that His Majesty King Juan Carlos of Spain will visit the Republic of Cuba in 1999 during the Ibero-American Summit which will be held in the city of Havana. There had been continuing reports that King Juan Carlos would visit the Republic of Cuba in 1998.

UPDATED SPEAKING SCHEDULE

29 May 1998- Mr. John S. Kavulich II, President of the U.S.-Cuba Trade and Economic Council, is scheduled to appear at a luncheon sponsored by The Cuban Studies Institute at Tulane University in New Orleans, Louisiana, and in cooperation with the World Trade Center of New Orleans, Whitney National Bank, City of New Orleans Office of International Relations, Gulf Coast International Hispanic Chamber of Commerce, Louisiana Department of Economic Development, Louisiana International Trade Center, Louisiana International Trade Commission, and Traffic and Transportation Club among others. 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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