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    Poverty in Cuba increases as government slashes social spending, expert says

    Posted on Saturday, 02.08.14

    Poverty in Cuba increases as government slashes social spending, expert
    says
    BY JUAN O. TAMAYO
    JTAMAYO@ELNUEVOHERALD.COM

    The reforms pushed by Cuban ruler Raúl Castro are necessary to fix the
    country’s economy, but are eroding social services and have not led to
    increased productivity, economist Carmelo Mesa-Lago said Saturday.

    Social services accounted for 55 percent of the government budget and 37
    percent of the Gross Domestic Product (GDP) in 2007-2008, one of the
    highest levels in Latin America but one “that could not be sustained,”
    Mesa-Lago said.

    The latest official figures show social spending – essentially health,
    education and welfare – dropped to about 30 percent of GDP, said the
    professor emeritus at the University of Pittsburgh, who is considered
    the leading expert on the Cuban economy.

    “The result of all of this is that there’s more poverty,” he added,
    estimating the poverty rate in the communist-ruled country of 11.2
    million people at about 26 percent.

    The combination of “zigzagging” reforms and cuts in social spending
    “cannot end well,” he told a seminar at the Ermita de la Caridad in
    Miami organized by the church as part of Catholic Social Week.

    Cuban officials have estimated that state payrolls have a surplus of up
    to 1.8 million workers, he said. Yet Castro’s hopes to expand the
    private sector so that it can take in laid-off state workers have not
    come through. By the end of 2012, there were only 365,000 workers in the
    non-state sector.

    The purchasing power of salaries plunged by 73 percent since 1989 – when
    the Soviet Union began halting its massive subsidies to the island –
    while the prices of food and utilities have been rising, Mesa-Lago said.

    Trying to improve incomes, Castro five years ago abolished salary caps,
    ordered that salaries be tied to productivity and made it legal to
    receive extra payments in hard currency and hold more than one job. Yet
    those changes have shown “no results at all,” he added.

    Cuba’s public health system was once the best in Latin America, the
    economist said. But cuts in government spending have led to the closure
    of hospitals and clinics, reductions in diagnostic tests, shortages of
    medicines and long waits for surgeries.

    The 1.8 million pensioners get an average of $10 a month, equal to about
    3 percent of the GDP. With the country’s population growing older as
    youths leave and birth rates remain low, “that problem has no solution
    in the long run,” Mesa-Lago said.

    Spending on public education also has been cut, but the impact has not
    been too harsh because there are fewer youths to enroll in schools and
    the government shut down costly operations, such as university classes
    offered at the municipal levels, he said.

    Housing is the country’s worst problem, the economist added, with a
    shortage of about one million dwellings due to lack of maintenance, a
    growing population and damaging hurricanes. About 111,400 units were
    built in 2006, but only 21,000 last year.

    Source: Poverty in Cuba increases as government slashes social spending,
    expert says – Breaking News – MiamiHerald.com –
    http://www.miamiherald.com/2014/02/08/3921652/poverty-in-cuba-increases-as-government.html