27/07 20:17 CET
Cuba has much more than an economic crisis. Its state-controlled,
centrally-planned economy is frozen and badly in need of modernisation.
It can't meet the basic needs of Cubans who must turn to the
black-market where products, which are often stolen from the state, are
bought and sold.
There has been a sharp fall in gross domestic product. GDP growth was
12.6 per cent in 2006 but only 1.4 per cent last year.
Facing a severe budget deficit, Havana had to cut spending on imported
food and other basics by over a third in 2009, compared with the
It is also looking at slashing the number of people on the government
payroll. Cuba's workforce is 5.1 million, half of the island's
population of 11.2 million and 85 per cent of jobs are state jobs.
President Raul Castro has said the number of what he called "unnecessary
workers" could be over one million.
The state controls 95 per cent of the economy, making it difficult to
initiate changes without major reforms moving much more towards a
Making things worse, the sugar cane harvest this year was the worst in
more than a century.
The global economic crisis has also hit tourism. Last year, the number
of foreign visitors rose by three per cent but the tourism sector's
earnings fell by 10 per cent.
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