Cuba banker says state has lent ‘millions’ to more than 13,000 farmers under ag initiative


HAVANA, AP — Cuba says it has extended more than 13,000 farm credits under an agricultural overhaul launched by President Raul Castro.

Ileana Estevez is president of the Banco de Credito y Comercio. She says state banks have lent “millions” at interest rates ranging from 3 percent in the first years to a high of 7 percent.

Cuba began restructuring the agricultural sector in 2008, letting private farmers cultivate fallow state land. The initiative aims to reduce dependence on costly food imports and is part of a wider economic overhaul.

Farmers can work plots as big as 100 acres (40 hectares) in renewable agreements of 10 years for individuals and up to 25 years for cooperatives.

State newspaper Juventud Rebelde published Estevez’s comments Sunday.

 

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Cuba OKs credits for entrepreneurs, farmers


HAVANA – Cuba has authorized government banks to offer credit to farmers and small business owners, a key step in a series of sweeping economic changes ushered in over the last six months, state-run media announced Wednesday.

The government has granted tens of thousands of business licenses to new entrepreneurs, and has also loosened restrictions in order to allow farmers to sell their products directly to consumers from roadside kiosks. One of the main challenges facing the new businesses is a lack of financing, making bank credits an important ingredient for success.

The program authorizes credits for purchasing farming equipment in authorized stores — rather than on the black market. It also allows for “loans to persons authorized to operate private businesses to finance working capital and investment,” according to an article in the Communist Party daily Granma.

The article said the measure was approved Friday at a meeting of the Council of Ministers, presided over by President Raul Castro. It gave no details on how credits can be obtained, or what interest rate or other rules the payouts will be subject to, or what the total amount of such loans will be.

Some economists have expressed doubts that cash-strapped Cuban banks will be able to handle the loans and have urged the state to reach out to foreign investors for capital.

While the article made no mention of such a move, many entrepreneurs are receiving foreign capital infusions of a kind: seed money sent in the form of remittances from relatives overseas, most of them in the United States and Spain.

A recent decision by the Obama Administration that allows any American to send up to $2,000 a year to Cuba could make such loans even easier.

Castro has said the economic overhaul is intended to update Cuba’s socialist economic model and is not a wholesale switch to capitalism.

The newly approved credit measure “supports the updating of the Cuban economic model,” Granma said Wednesday.

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Creditors still fret despite Cuba improvements


La Nueva Cuba:

Cuba managed to stop the hemorrhaging of foreign exchange that left it unable to pay many bills the past year, officials said this weekend, but creditors who are owed an estimated $2 billion do not expect to be paid in full any time soon.

Cuban officials told the National Assembly over the weekend the country’s economic crisis had stabilized, but government spending would be limited in 2010 as the island continues to deal with effects of devastating hurricanes in 2008 and the global financial meltdown.

Cuba, which is heavily dependent on imports, stopped paying many suppliers last year and froze the Cuban bank accounts of most foreign companies operating on the island as the crisis drained its cash reserves.

Economy Minister Marino Murillo told the assembly that the government had turned 2008’s $2.3 billion trade deficit into a surplus of $400 million by cutting imports 37.4 percent, or $6 billion, this year.

That, he said, helped offset a 22.9 percent drop in exports, or $3.1 billion, caused by plummeting prices for Cuba’s key export products including nickel, tobacco, lobster and technical assistance to oil producing clients such as Venezuela and Angola.

Murillo said Cuba’s overall economy grew 1.4 percent in 2009, down from 4.2 percent the previous year, and would put in a similar performance in 2010.

Murillo did not say if the government had improved the country’s cash reserves, which are never publicly disclosed, but did tell the assembly that spending would be dictated by a simple principle.

“The amount of foreign exchange we plan to spend in 2010 will be less than the income we expect,” Murillo said.

Regarding debt, he said, “Negotiations with some countries and suppliers to restructure debts and guarantee payment under more favorable conditions have begun.”

LITTLE TO CHEER

His words brought little cheer to creditors, who had hoped for a signal that the money they are owed would be forthcoming.

“I see nothing in Sunday’s report that indicates significant amounts of money will be generated or put aside to pay fresh debt racked up to suppliers and banks this year,” a foreign businessman, who asked his name not be used, said on Monday.

“Further, I see nothing indicating fresh money flows from current or new exports,” he said.

There was a little bit of good news from President Raul Castro, who told the assembly that the government had unblocked about 30 percent of funds of the frozen bank accounts of foreign companies.

There have been estimates that as much as $1 billion has been locked up in the accounts.

Castro, who took over for his ailing brother Fidel Castro in 2008, has repeatedly called for making the communist system more productive and efficient to ease its chronic economic problems.

Murillo said in his speech the government would loosen its stranglehold on the finances of export industries such as nickel and tobacco, and foreign exchange earners such as communications and tourism.

Few details were provided, but it appears that the change will allow state companies to retain a percentage of their earnings instead of handing all profits over to the government, which then allocates them as is currently done.

Osvaldo Martinez, head of the National Assembly Economic Commission, said the new system was aimed at ensuring that the companies will have the foreign exchange they need to guarantee production “with priority over any other use” by the state.

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Cuba thrice delayed repayment of Russian credit


MOSCOW, July 3 (Itar-Tass) — The Russian Audit Chamber said Cuba had three times delayed repayments of the Russian state credit provided in September 2006, however Moscow imposed no fines for overdue debts.

“Since the signing of the agreement (on granting a state credit against Russian goods and services) the Cuban side has three times violated the payment terms. However, the credit provision has not been suspended and no fines were imposed as for June 1, 2009,” the press service of the Audit Chamber said in a statement on Thursday.

Various violations have been exposed in selection of suppliers, as contracts have been signed with companies that had no sufficient production and sales capabilities. Besides, authorized Russian bodies did not control the implementation of the contracts and insufficiently cooperated with Cuban counterparts, it said.

“The exposed violations became the reason for the delay in 2007-2008 in the implementation of the agreement between the governments of the Russian Federation and the Republic of Cuba on the provision to the government of the Republic of Cuba of a state credit to finance deliveries of Russian goods, works and services,” the Audit Chamber said.

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