Havana: Cuba is drastically cutting electricity, imports and investment, as well as reducing fuel consumption by 28 per cent through the end of the year, its economy minister said on Friday in a closed-door speech to the National Assembly published by official media on Saturday.
The measures are sure to put the import-dependent economy into negative territory, despite a tourism boom in the wake of a growing detente with the United States. They also represent a huge setback for a country struggling to reform an already decapitalised and often dysfunctional system.
Cuba's economy grew just 1 per cent in the first half of this year after expanding 4 per cent in 2015, according to the government, which says it imports 17 cents of inputs, such as raw materials, for every $1.00 equivalent of economic activity.
"We planned to import $14.416 billion to support 2 per cent growth this year, but with the adjustments we will spend $11.973 billion," Economy Minister Marino Murillo said, a reduction of nearly $2.5 billion, or 15 per cent.
President Raul Castro said on Friday that lower commodities prices were battering Cuban exports of nickel, refined oil products and sugar, while revenue from the sale of professional services to oil-producing countries such as Venezuela and Angola had suffered.
Castro, also speaking to the National Assembly, said the economic crisis in Venezuela was affecting its oil supply to Cuba, with Venezuela's shipments of crude oil and refined products to Cuba down 20 per cent this year according to a Reuters report on Friday.
Murillo announced that 17 per cent of planned investments for the year were being put on hold, as well as unspent credits, such as from banks, governments or suppliers to purchase goods.
He said that further imports on credit would be strictly regulated by the Communist-run country where the bulk of the economy is in state hands.
Cuba has a history of liquidity crises and energy rationing, especially in the 1990s after the collapse of the Soviet Union.
Cubans dread a return to the daily power black-outs of eight hours or more, dearth of transportation and other severe shortages.
The current restrictions will not be as severe, but they come at a time when Cubans' expectations are higher thanks to the detente with Washington and economic reforms.
Murillo took pains to explain that the cuts would be selective, for example, sparing residential electricity while cutting public lighting by 50 per cent.
He said electricity consumption for the year was being reduced 6 per cent, but the reduction would all fall in the second half of the year, which just started, and selectively.
Sectors such as tourism and nickel would be spared, while others that do not contribute to export earnings or import substitution would bear the brunt of the cuts.