March 17, 2000
Squeezed by high oil, low sugar prices, Cuba pushes conservation

                   HAVANA (Reuters) -- Cuba's leaders have called for fuel-saving measures
                   and cuts in energy imports to offset a financial squeeze caused by high oil
                   prices and low prices for sugar, the main traditional export, state media said
                   on Friday.

                   "We have to save fuel and reduce its import," Cuban Vice President Carlos
                   Lage told local government officials in comments reported by the Communist
                   Party daily, Granma.

                   Economy Minister Jose Luis Rodriguez said high world oil prices and low
                   world sugar prices had cost the Cuban economy $38 million in the first two
                   months of this year alone. This represented additional spending and lost
                   revenue that had not been planned for.

                   Lage said the government had set up a special commission, headed by
                   Central Bank President Francisco Soberon, to draw up measures for a
                   significant reduction in fuel imports for the second half of this year, and for
                   next year. No details were given of what these measures might be.

                   Cuban President Fidel Castro also attended the meeting of heads of
                   provincial local assemblies of the communist-ruled Caribbean island. Many
                   of the participants cited fuel shortages affecting activities in their territories,
                   Granma said.

                   The call for additional fuel-saving measures sounded a somber note at a time
                   when Cuban leaders had been hailing signs of recovery in the economy,
                   which was hit by a severe recession in the mid-1990s following the collapse
                   of the Soviet bloc.

                   The deterioration in Cuba's terms of trade would mean an additional financial
                   squeeze for the island, which is already burdened with an $11.2 billion
                   international debt and a U.S. trade embargo that has been in place for the
                   last 38 years.

                   The Cuban government has set an official growth target for this year of 4.0
                   percent to 4.5 percent after announcing that gross domestic product in 1999
                   grew 6.2 percent, one of the highest rates reported in Latin America.

                   Lage noted that world prices for nickel, traditionally Cuba's second most
                   important merchandise export, had risen, while prices for strategic food
                   imports remained generally low. But he said this did not compensate for the
                   strong negative effect of the oil and sugar price movements.

                   Cuban officials have reported that the island's current 1999/2000 sugar
                   harvest is generally progressing well and shows improvements in terms of
                   efficiency and reduced costs.

                   But some local and foreign analysts believe that, with this year's fall in sugar
                   prices to around 5 cents a pound, the Cuban industry may well be producing
                   raw sugar at a loss, when measured in net hard currency terms. Sugar prices
                   stood at 6.1 cents at the start of this year and at 8 cents a pound in early

                   At the same time, high oil prices would add to Cuba's already big energy
                   import bill, which has ranged around $1 billion in recent years.

                   Nevertheless, the government is increasingly banking on tourism, the island's
                   fastest growing sector, to be the main motor of economic growth and
                   development. Tourism is expected to bring in more than $2 billion this year.

                   The country can also count on Cubans living abroad to continue sending
                   money home, a financial inflow estimated at about $500 million and possibly
                   more each year.

                    Copyright 2000 Reuters.