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FROM [email protected]

C U B A Havana. December 23, 2010

Economic results of 2010 andproposed plan for 2011

Speech by Marino Murillo, vice president of the Council of Ministers

and minister of economy and planning

(Typescript version Council of State)

Marino Murillo.- The deputies have been provided with a report,

which they have had for several days, containing an estimate of the

movement of the economy this year and the principal objectives of

the plan for the coming year.

These are more or less the issues that we are going to touch on this

morning: the economic indicators, commercial exchange as seen in

the 2010 estimate; the internal financial balance; the performance of

the balance of energy, investments and construction and the state

budget.

You have in the report the selected economic indicators that we are

going to discuss.

Now, in the course of the explanation, while we have been able to

achieve the Gross Domestic Product growth in its structure as we

anticipated in the plan, that is not exactly matched by the

contribution of each of the entities in meeting that growth. Certain

entities which should have contributed more to the GDP within the

economy this year did not do so, and others experienced a growth.

I want to mention a concept that we will return to later. Theshortfalls in relation to the plan are to be found in the material

production sectors. Thus, if there is a shortfall in the productive

sector, particularly in entities linked to the primary sector of the

economy, that is where the material wealth is produced.

Exports. Exports are growing considerably, targets are being met,

they have grown by 41.5%. But the situation is that, even though

they have grown, they remain below the plan.

Here there is an element which is important to discuss and to be

aware of: that the performance of some of our export products in the

granma.cu - Cuba http://www.granma.cu/ingles/cuba-i/23diciembre-Economic...

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world market was above that anticipated in the plan; however, their

physical production was not achieved, as in the case of nickel, which

we forecast at $14,400 per ton, with the average price of nickel

touching $20,000 per ton. What does that mean? That even when

the price was favorable in comparison to that anticipated in the

plan, by failing to meet the physical production we lost additionalincome, and that should be known. That cost us $120 million.

There was another product that had an average price well above the

one we anticipated in the plan, which was the case of tons or pounds

of sugar, however you want to put it and, given a significant shortfall

in exportable sugar production, we were similarly unable to take

advantage of the situation of market prices being higher than those

that we planned. And, in the case of not meeting our sugar exports,

we lost income in the order of $60-65 million which we would have

seen if the physical production envisaged in the plan had been met.

And so, other things also happened.

I am saying this because it is important for 2011 to concentrate on

the export commitments of all the entities and the productive base.

It is not right that we were unable to take advantage by failing to

meet the physical production targets in the plan, especially when

international market prices are favorable.

Failing to meet physical production targets with a price growth in

the international market denotes a symptom of little foresight within

the economy in order to be prepared and be able to take advantageof situations that occur at a given moment.

In our analyzes of the economic management , we lack analyses and

an integrated approach, and this is valid for all the entities involved

and for everybody associated with productive commitments, and

fundamentally, export ones. Because we can have much hard

currency administration, much renegotiation of debts; but if we do

not meet income targets, the possibilities of continuing

administering that are going to be steadily more limited.

I emphasize that this year we could have had higher income in thecontext of exports, which we did not have due to productive

shortfalls; in any event, as I said, exports grew.

The foreign trade outcome is positive, because the relation between

export goods and import goods is negative. It is the export of

services that has made the results of the countrys foreign trade

positive.

Another important element is fulfilling the investment process.

At a specific moment, 12 months ago, we adjusted the investment


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plan, we cut close to $950 million of it halfway through the year,

because these were investments that were not the most important

ones at that moment and they were investments that were not

associated with the policy that had been defined; in other words, the

priority was for investments that would provide income in the short

term and which could be recouped from the output of theinvestment itself.

But this year, while there were investments that did meet that

policy, which gave income in the short term and which paid the

debts and financing with money generated from the investment

itself; however, neither are we going to fulfill the investment plan at

an adequate level.

That demonstrates that discipline, organization and training in the

investment process are needed in all sectors of the economy, without

exception.

There is lot of improvisation in the investment plan and the

tendency is to want to incorporate into the plan investments that

have not been thoroughly prepared, and the tendency is to want to

incorporate into the plan investments that have not passed through

an integral analysis and the effect that this could have on an

inducted investment beside it, and this leads to the fact that we are

not going to fulfill the investment plan for this year.

It is true that some of them were not made, because external

funding was not available at a given moment. It is also the result of alack of integrality in the analysis, because if we do not have secure

funding why would we incorporate the investment into the plan,

because after you incorporate it into the plan, independently of

external financing, in passing you throw out the balances of the

economy, because you have to balance construction materials in

order to assign them to that construction. And afterwards, the

investment cannot operate because of lack of external financing,

partial or total, but the materials have already been assigned, and I

would like to see who checks every last bag of cement to ensure that

it isnt used for purposes other than that of the investment that we

made.

In total contradiction to what should have happened, even in recent

months, August-September, when we had realized that the

investment plan wasnt going to be met, what we had on top of the

table was pressure from the entities to incorporate more

investments into the plan, which could not be the case. And I am

also saying that the Ministry of the Economy in particular is

responsible for that, because thats the Ministry that I head; because

the guiding agency for efficiency in the investment process is the

Ministry of the Economy, and we have lacked discipline and also an


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integral approach at the point of assessing the investment process;

but a lot of money is being lost and many opportunities by failing to

meet the countrys investment plan.

We have to get rid of the headstrong mindset that we have and

sometimes being gaily content to put any investment into the plan

without the analysis needed.

After explaining the way in which we have set up the investment

plan for the coming year Im going to refer to that as well, because

we have to criticize everyone and in particular ourselves for the little

rigor that the investment process currently has, and if we dont look

at ourselves harshly, were never going to transform this panorama.

That is how it is.

Well, in the energy sector, the economy is improving its efficiency.

In terms of electrical energy consumption in the state sector the

anticipated figures have been maintained slightly below the levels

anticipated, but there is an over-consumption against the plan in the

residential sector; however, it should be said that, starting from a set

of savings measures and controls in the assignation plan for energy

providers, the economy is a little bit more efficient than we

anticipated in the plan and is more efficient than in the last period,

which does not mean to say that there arent a lot more savings

reserves in terms of energy providers in the country in general.

In the plan the mercantile circulation of goods and services was set

at 31.571 billion pesos, we have an estimate of 30.979 billion:MINCIN (Ministry of Domestic Trade) 20,720 billion, and there is

going to be 20.5 billion pesos in the year. MINCIN is going to be left

with a deficit in the mercantile circulation plan mercantile

circulation is retail sales in pesos of approximately 220 million.

If there had been a little better organization in the first quarter of

the year in MINCIN sales and assured supplies from national

producers to MINCIN in that quarter, the year plan could have been

perfectly met, because they are selling 50-plus million pesos every

day, and given that the shortfall is 220 million, with six days more

than the year contains, they could have met the sales plan; but thatsnot possible, the year has the days that it has, and it ends on

December 31; it was the first quarter of this year that wasnt good. In

any event, liquidity in the hands of the population.

What is liquidity? it is the money that people have; what happens is

that that money in the hands of the people; part of it is in the bank

and the other part is in peoples homes that is so-called money in

circulation.

Part of the liquidity is also in savings accounts and that is a liquidity

held by the population, but one which puts less pressure on demand,


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because it is being kept. Then there is also the risk, given that those

accounts accrue interest, they grow over time; but the good news is

that liquidity in the hands of the population did not grow and

remains slightly below, that is synonymous with us having had a

stable internal financial balance for 18 months. Imbalance in

internal finances is not one of the disproportions that the economyhas today.

Well, in terms of the GDP, we had calculated that liquidity in the

hands of the population would be 43.2% of the GDP, and it is at

41.8%, exactly the same as it was in 2009.

Work productivity grew by 4.2% and the average wage grew by

4.4%.

In any event, the fact that one has neared 4.2% and the other 4.4% is

a good sign because, as we explained last year, we were carrying that

problem for a number of years without being able to solve it; and we

explained that even with the two adjustments we made to the plan,

in the year in which we adjusted the plan, we still couldnt solve that

problem, and we explained that the plan itself still hadnt solved it,

and now we are coming very close to a balance, and next year there

will be improvements in the budget plan that we are making. For

next year we are giving 1.95% of course, that is also associated

with the process of reducing inflated rosters and labor availability,

because if employees leave the state sector and the economy grows,

clearly thats going to improve that relation.

In global terms, that is a favorable result for the movement of the

economy in the year that is ending.

There is a group of global indicators which is improving and having

achieved 2.1% signifies quite a major effort, even given what I was

explaining in terms of shortcomings in certain sectors.

I said just now that, while the economy grew as anticipated, there

were specific entities which did not meet their growth targets. In the

case of agriculture, 12 areas of production failed to achieve the

productive levels anticipated for the year, particularly in agriculture:meaning pork meat, eggs, rice for consumption, root vegetables,

fresh vegetables, beans, citrus fruits and lumber. This shortfall in 12

productive sectors resulted in additional imports of $63 million

above those anticipated. We had to rush to find a shipment of beans,

we had to import more rice. Here there was everything: here there

was a lack of water, one thing or another, but also there were many

organizational problems and a lot of indiscipline on the part of

producers.

These are the productions that have been most affected, here are the

data. The rice target was 327,000 tons and the estimate that we are


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giving is of 247,000 tons. That meant that with this volume of rice

produced we had to deliver 169,000 tons of rice to MINCIN to

distribute via the household ration system or for social

consumption, and the latest estimate we have is 81,000 tons, and

that shortfall had to be imported, and is part of the $63 million

figure that I already gave you.

It has to be said here with all honesty, that if we do not straighten

out efficiency in the investment process and we do not straighten

out efficiency in the primary sectors of the economy, we will not

meet the economic production targets for 2015. Those things are

determining factors in the movement of the economy: agriculture,

MINAZ (Ministry of the Sugar Industry), the food industry and

efficiency in the investment process. If these three things go badly,

the economy is not going to function well. And that is what those

entities are being called upon to do, they are going to play a

determining role in the movement of the economy.

In the case of the food industry there is a knock-on effect, that if we

are not capable of making it more efficient and producing what is

anticipated in the plan, then we will have to import $1.6 billion in

foodstuffs in the coming year: $200 million to meet the internal

hard currency market and $1.4 billion to meet what we buy and

distribute through the ration system, plus food for social

consumption. And there, there is a lack of organization, a lack of

precision and a lack of quality in contracting productions with the

productive base. And everything catches us on the hop: either there

is too much sweet potato or there is no sweet potato, either there areno beans or there are beans.

And there is also a lack of foresight in the plan for providing the

resources to these entities so that they can produce in a stable way,

as they must do, and not at the point when we do not have a specific

product; in any event, given that we have to eat, we have to go out

and buy it. Orderliness in the process of the plan and on the part of

the Ministry of the Economy with the three entities associated with

food production is a determining factor in the economic results

which we want to have in the next few years.

In the case of milk, 10 million more liters than anticipated is going

to be produced; but there was also indiscipline in milk distribution

and consumption. In that way, the productive increase of the 10

million liters is not going to directly reflect in terms of replacing

dried milk, because we are going to spend more on imported dried

milk than anticipated in the plan. There were provinces out there

which even changed the distribution policy and those that were due

to receive 10 liters of milk per month, received 30 liters. Those are

the countrys policies and you have to consult before changing them.


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And likewise, even though there have been advances in fuel control,

there are entities which did not meet their levels of activity but went

over their fuel consumption allocations for the year; that happened

as well. In the case of agriculture that cost us 17,800 tons; there are

others as well, in a lesser quantity. But there has to be tight

discipline, because if there isnt, we are not going to put the

economy in order. This is the time to support the objectives of the

plan and not set about inventing anything outside of the plan.

Failing to meet the sugar harvest also comes into play; that also cost

us a lot of money, with sugar prices being very favorable; there was a

shortfall of 195,000 tons.

The structure anticipated in freight transportation was not achieved.

This year we have to move 54-55 million tons and that freight

transportation had an envisaged structure: motor transport,

railroad, here as well as there, for specialized enterprises attached to

agencies, for the Ministry of Transport. And the structure we

envisaged in the plan was not achieved, and we have to be strictly

disciplined with the freight structure, because if you were supposed

to transport a sack by rail and then you loaded it onto a truck, where

does the difference in fuel come from; because the railroad is much

more efficient than motorized transport. The guiding institution and

the one responsible for freight structures being met is the Ministry

of Transport, and this issue also gives it a lot of work with the

entities.

Now what is happening is that they are telling us, "Well, the

Ministry of Transport was supposed to have transported x cargoes

for me and I had to do it myself." Well, you have to go there and say

to the Ministry of Transport, "the fuel allocated for that has to go

through here." But we have to strictly comply with the freight

structure.

And I will take advantage and say here that investments made in the

railroad system in the Ministry of Transport are being paid for with

fuel savings, and fuel savings are achieved by complying with the

freight structure. This year, we are going to move 54 million tons ofproducts with 222,000 tons, approximately, using diesel; and next

year we have to move 2 million more with 182,000 tons. If that

freight structure is not complied with and more fuel is wasted

transporting the same amount, where are the savings for paying

everything that we are doing on the railroads, the investments that

have been made?

I insist on the idea that the concepts, the numbers and the costs of

the plan have to be followed every day.

Internal financial balance. First, in order to have balance you have


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to have sales and, out of 20,720 million, MINCIN is making an

estimated 20,500 million, and that gives us an acceptable balance.

We have that situation controlled.

In the case of investments and construction, which I have already

talked about, what is most outstanding here is the failure to fulfill

the investment plan.

There is a shortfall of 22.4% in the component of construction and

assembly and this is associated as I said with the lack of an

integral assessment of the investment process and, on certain

occasions, the availability of foreign financing.

We had envisaged 32,000 homes and 32,748 are going to be

completed, but growth is being determined, which is also correct, by

homes completed by individual effort.

In relation to water balances, a little less water is going to beconsumed than the anticipated volume, but in many cases this

consumption has been associated with the drought.

For the 2011 plan we are incorporating water balance as a category

within the plan; and I am going to say something about that when

we discuss the plan for 2011.

In relation to the state budget which you also have in the report

a deficit of 2.466 million is anticipated, up 0.3% on that inscribed in

law for this year. In that context, what is approved in the budget is a

deficit of 3.5% and its going to 3.8%. That increase in the deficit isfundamentally associated with shortfalls in income, because there

the reduction in expenditure was also lower than that anticipated.

On the next page, you can see the performance of budget income

and expenditure.

There we are announcing that the Comptroller General of the

Republic has audited the central budget and the budget in the

provinces. There has to be an ordering of the central budget,

including the accounting expression of the budget; but the tendency

is toward many shortcomings in the administration of budgets at all

levels, accounting indiscipline, diversions, appropriations, and there

has to be an ordering, from the central budget to the budget at all

levels and a superior administration of the budgets, because many

resources are also lost in this way and all of us who have to

administer the countrys resources have a responsibility in this.

Even so, we managed to decrease expenditure by more than one

billion pesos; but what nobody knows is how much could still be

saved in terms of the money diverted, waste and lack of control that

there is in everyone who has to manage a budget. This is an audit of


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processes as has been said which has ranged from the central

budget to the latest budgets, and we have received part of the report

and are currently awaiting the other, and it is true that there is a lot

of reserves and much disorder in the handling of budgets, which

could produce savings (He is told something)

The president is saying that here is the larger source of income that

we could have if we did it well.

Ral Castro.-just by reducing waste or part of it.

Marino Murillo.-And we are also alerting on this issue of managing

budgets, which we will be discussing in the next few days, in terms

of the subject of the economic policy guidelines and the updating of

the economic model, and given the participation that work under

non-state formulas is going to have, if this is not well controlled in

terms of budgeting, very strange phenomena could occur.

And some little things that we have done have not been well fulfilled

and strict discipline will have to be applied to that.

There are other deficiencies.

The Ministry of Economy and Planning, with the plan's current

mechanisms, has not been able to comprehensively project the

financing costs for imports needed to meet production expectations

during the year and [insure] that the expenditure does not later

become one spent to import finished products. We can't have it that

today we don't have money available to import raw materials andtomorrow, when the final product is needed, the money appears,

since the finished product, in a crisis situation, is much more

expensive to import.

Those of us in the Ministry have to be more demanding within the

investment process; sometimes, even when we make an adjustment

to the plan, the adjustment is insufficient. We dropped 1.2 or 1.4

billion from the investment plan and we still need to have more

difficult discussions with the entities in order to further reduce the

plan to an estimate that we already knew wasn't going to be met

because, additionally, as I said, when you leave the investment in the

plan, you leave the resources moving about in the economy and if

the investment isn't going to be executed, you need to pull the

resources allocated.

It's true that the way in which we receive income from abroad is not

linear; and there are periods of time during which the money doesn't

get here and later on, it piles up. We need to identify precisely,

ourselves and the bank, funds which are temporarily available,

because production can't wait for financing. It has its own rhythm

and when it's interrupted, the logistics become more complicated.


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For example, halfway through the year, the provisioning of raw

materials for the production of medications was interrupted and we

are still facing a shortfall in our central stocks of medicine and I can

guarantee you that, from the middle of the year 'til now, the

financing for both QUIMEFA and the Scientific Pole has been

available, but at this point we are still not meeting the plan for theyear. Since a bump in the road appeared and the provisioning cycle

was disrupted, we are still facing a deficit in the central stocks of

medications.

We need to find funds which are temporarily unencumbered, to

have them in place and available, so that production is continuous.

The same can be said for continuity from one year to the next,

because it's December 31st up until midnight but then January 1st is

upon us. If we don't prepare for the next year's first quarter during

the last part of the year, we lose three months of production.

This year, we managed to make these advance plans at the end of

November, the beginning of December; but we've seen that, this

coming year, we need to get started halfway through the year, so

that the contracting process is timely.

Shipment alone from China takes 45 days and producers request 60

to 90 days to complete orders, but the economy can't withstand this

disruption of the production cycle; this has happened and when it

happens, we don't meet our goals and we have to import finished

products.

This is truly a deficiency that the plan has not resolved, not in its

development, or in its actual execution. We have to work on this.

That's why, as I explained, three times this year, financing was

advanced.

So now, where are we? We are now at the point when the entities

receive their figures for the coming year and they are identifying

different parts of their business plan and what is expected is that, on

January 1, everyone should have their plan in hand and everyone

should know what they have to do and it's a good thing that the

deputies should know this.

There is not a single entity that can, in any way, justify an enterprise

in Cuba not having a plan in hand on January 1. This is what the

Council of Ministers agreed to. There can be no improvisations,

because if you don't have a plan on day one, what are you going to

do during the first period of the year? Where are the resources

coming from? Where are the funds coming from? What do you have

to produce, at what cost, how efficiently? What effect does your

production have on the next guy's? So that what happened to us one

day doesn't happen. We were checking some of MINCIN's sales and

MINCIN said, "We didn't meet the sales target because they didn't


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give me the beds." The bed people said, "We didn't produce the beds

because somebody else didn't give us the pipe." And the pipe people

said, "We didn't deliver the pipe because the raw material from

China didn't get here." We can't have it, it's a chain reaction. We

have to make sure it doesn't happen.

To summarize, in 2010, the organization of the economy's

functioning has improved, despite what has been said.

I believe it's important to talk about what remains to be done in

terms of organization and not exactly what we have done. Debt is

structured better; there is better control of hard currency income.

This organization which has been achieved at certain levels is,

however, not yet reflected within the system of enterprises and it

really has to get to that.

Now then, we're going to explain the main characteristics of what is

described in the 2011 plan.

The gains in food production are modest considering the high

volume of foodstuffs we will have to import this coming year. Even

next year's plan does not resolve the issue; despite the expected

increase in food production within the country, we are going to be

importing food worth approximately $1.6 billion. It's growing, but

we're still importing a great deal of food.

Let's look at rice. Next year, we will have to get 445,000 tons from

Vietnam, which have already been signed for, contracted; now of

these 445,000 tons, more or less, 50% must be paid for within 360

days and the rest within 540, but 445,000 tons of rice is going for

around $231 million.

Therefore, everything that can be done in terms of rice production in

Cuba, in an orderly fashion, not like we've been doing, with the

comprehensive approach required, not like we've been doing, could

save 200 and something million dollars every year. I'm saying, with

the comprehensive approach required because we water the rice, but

we lose 50% of what we apply and later we say we can't plant rice

because our water reserves are low and then later, the harvest iscompleted and the milling machinery isn't there on time. There is a

lot of potential to increase rice production in Cuba, but the rice

program has not been comprehensive.

Let's look at the issue of investment. Some 50% of investments are

productive; 13% are in production infrastructure; 19.2 are social,

which includes 43,000 dwellings; there is a 10.6% portion devoted

to social infrastructure, of which 2.1% and 4.3% represent urban

development and water supply respectively. This means that, 63% of

the investment to be made by the country during the coming year is

focused on production and production infrastructure. This reflects


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the policy that investments generating hard currency income for the

country, and those which provide a rapid return, should be

prioritized within the investment process. As you can see, the

structure is favoring productive investments and, within the social

sphere, we will have to make do with what we have for a few years.

Now, another explanation about the investment process. Works in

progress are prioritized, representing 77% of the total. We need to

maintain continuity with those investments that as of December 31

are in progress and will continue into the next year without

interruption.

Well now, moving on to another issue. What new characteristics will

MINCIN's distribution of merchandise have this coming year? Those

which have already been seen this year, but will be ratified next year:

projected is the distribution for sale of agricultural supplies worth

493 million, that's work tools: machetes, axes, barbed wire,everything associated with what is being demanded by those who

have received land in usufruct and for established campesinos as

well.

At this time, there is a program which we've called the Campesino

Program - we check this every month - the sources of financing are

clearly defined, just about all of this is produced by the steel

industry, SIME, and some of it by MINIL, the light industry, and

where the resources to produce all of this will come from has been

taken into consideration. MINCIN's responsibility to distribute

these products, and the network of agricultural sales outlets wherethey will be sold, have been established.

Since the beginning of time, the general store has always existed in

rural areas, where people go to buy what they need and those

products need to be supplied. Ah, these products are not going to be

subsidized, they will be sold without any subsidy and we are

reviewing the prices now, too.

There are some products which have come out at a price that may be

a little high; during the first quarter of the coming year, given that

many of the general stores have a surplus of these products, we willbegin to make some decisions about the prices, if we have to lower

them, or raise others. What we have coordinated with ANAP - and

Lugo agrees - is first to assure the supply of the products, and then

later we can talk about the price; that the products are available in

the market, and if, at a given time, it is necessary, we may have to

lower the price of a certain product, we can do it. In principle,

however, we are talking about the whole of these products, when you

multiply the money produced, it doesn't allow for a subsidy,

although there may be some which create more income. Therefore,

what we are talking about is the average, not each product exactly.


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I've seen that a few products are a bit expensive; we are going to

review the structure of those prices.

In another area, MINCIN is also getting involved, with sales of

construction materials this year already reaching 1.52 billion pesos,

with no subsidy.

One group of products for building walls and dry goods are sold by

MINCIN, in national currency, without subsidies, with all the

instability we've seen, with all the instability! That the cement blocks

arrive, but not enough, all this we know; that there were places

where the blocks were produced and then confusion as to who was

to transport them and there they were and MINCIN saying, we don't

have any gas and someone else saying, its not my job. All of this is

perfectly delineated and reconciled with all the entities in the plan

and exactly where everyone's responsibility lies.

The other day, based on an article that came out in the

Trabajadores newspaper, we had a meeting with MINCIN and the

construction materials industry and we have this completely defined

for the coming year.

Now we are presenting a problem. The country has been finishing

some 32,000 dwellings a year, of these 32,000, there are

approximately 8,000 which are finished every year, for which the

population receives subsidized materials. And we are of the opinion

that this has to be changed. Because then, what's going to happen?

We are going to have a cement block sold unsubsidized by MINCINat five pesos and we're going to have one sold by Housing and the

government at around 48 cents and its the same block and right

there what is being set up is theDale al que no te dio [song by Juan

Carlos Alfonso y su Dan Den] because the resources are going to find

their way from one place to another; those who have materials

assigned are never going to get them on time, and three or four

people are going to profit from that 40-something cent block, selling

it at five pesos, depositing the money and keeping the difference.

The idea we have is that this market should go to MINCIN's

distribution system, that it is the entity largely responsible for retailsales and should sell them without subsidy. And if someone needs a

subsidy in order to buy materials, then let's subsidize people and not

cement blocks, so when we sell cement blocks, we do it for everyone,

for those who have and those who don't.

The numbers are, more or less, the following: of the 1.52 billion

pesos worth of construction materials to be sold, one billion is going

to the state budget, in terms of distribution tax and we have

calculated that of this one billion, 888 million has to be set aside, to

be given to low-income families who now receive subsidized

materials, so that they receive a monetary subsidy and the cement


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block is sold in the market, at the same price for all. This policy has

been approved and is in the process of implementation.

The 880 million will permit us to finish 5,000 or 6,000 homes and

some 19,000 renovations, which is what is done today for the

families who receive subsidized construction materials. There

should not be, therefore, any impact. The only change is that instead

of receiving a subsidized cement block, you are going to receive

financing, which will have to be approved by the Municipal

Administrative Council. So, if it's 1.52 billion and we're taking 888

million for this, that means, more or less, 50 cents for every peso in

sales is devoted to this end, that we are going to distribute this

proportionately through the provincial and municipal budgets. So

that the number of cases which can be addressed will depend on the

sales made within the territory and that the Administrative Councils

will have to manage their budgets, even with all the limitations and

all that we've talked about here. That's why we spoke so forcefullyabout the kiosks this morning, because every time we go adding

different items [for sale], if this is not well organized from the

beginning, it can turn out badly. And it's not a bad idea, what was

bad was the implementation.

I'm saying this because delegates have already asked questions and

lots of people are asking what's going to happen to the hurricane

damaged dwellings that are half done. They are going to be

completed, what's happening is so irrational, that, today, the same

block costs 45 cents one place and five pesos someplace else, this

doesn't make the slightest sense, no sense whatsoever!

It is expected that the Administrative Councils, when they evaluate

people in need of help, so that they are able to finish their homes

with their own efforts, maybe, for Homer, the help has to be 100%,

but perhaps, for his neighbors, it's 50% because, "Look, you have a

family income which indicates you need help for 50% of the costs

you'll have to take on." He doesn't need a 100% subsidy, it's for 50%

and when we subsidize blocks, it's at 100%.

That is to say, that's the policy, we have to work hard and we're

implementing it.

Inspections of the dwellings have been done with MINCIN and it is a

test of what we've been saying as economists for 50 years now,

enough of subsidizing products, subsidize people, and it's a first that

we're going to do, as a very focused effort, in the sale of construction

materials; but it has to turn out well and it has to be controlled, and

it's more advanced than what others are doing.

The same goes for a group of people who one way or another won

themselves the right to build their home, they're building their own

home, they aren't working and they're paid their full wage. I visited


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one individual, not long ago, who was at home for five years. For

practically four years he was not given materials, and he was there

waiting for the materials and drawing his wage.

As for the issue of the municipal initiative and development, next

year, a 20-million fund is being created to support investments and

imports for local development. I won't take long with this, it's about,

and every province knows the amount it has. I believe Camagey has

1.1 million. Yesterday we discussed it with the provincial leaders and

everybody knows. We are waiting for them to present their projects.

The difference between what we are going to do during the coming

year and what we do now, is that now they send us their projects, we

look over them here with the bank and it's reconciled later with the

provincial commercial banks. Now the allocation is going to be made

to the province and when the proposal arrives, it comes with the

bank's opinion and what we all have to do is approve it or not. I needto forewarn that what should be proposed are productive projects so

that the returns generated remain in the local area, partially or

totally, as is approved for each project, which is the only thing that

will allow for sustainable development in the municipalities, in

accordance with the guideline we have there, that enterprises

subordinate to national entities contribute to municipal

development.

It's important that the [provincial and municipal] presidents work

on this and present us with projects as soon as possible. The plan is

projecting a fund of 20 million to try out this kind of activity, incomefrom which will later be incorporated into municipal budgets.

The state budget: for the coming year we are indicating a deficit of

3.8%. We would have liked to stay within 3.5%, but we couldn't do

it, although we are still reviewing it.

I thought it would be good for you to know that we are not only

working on this year's plan, but that work has been done on the

future prospects of the economy and these are economic models

which are run in order to go about achieving a more balanced

economy.

Compaero General of the Army, I have finished.

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Editor-in-chief: Lzaro Barredo Medina / Editor: Oscar Snchez Serra.

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