CUBA An Economic Renert for the Year 1962 ft. GENERAL i 1. 1962 was designated the "Year of Planning" and althougn oPerences had been made by Fidel Castro at the end of 1961 os to the plen for 1962, no such plan was made public. However, ; a number of sections of a plan were circulated within the ; virious ministries at times curing the year, by which the aurchases abroad of certain of the state monopolies wer regulated, ai though modified to a large extent in view .of the enor tage OF foreign exchange. .2, The economic situation generally had deteriorated in the Latter half of 1961 and on Peoruary 16 a three man cominission ; was estaplished with the title of Direction of National #conomy. It consisted of President Dorticos, Guevara, Minister of industries and Carlos Hafacl Rodriguez, head of the National : sastitute for Agrarian Reform (INRA), and its purpose was %o improve. economic activity at all levels. . we The food situation continued to worsen’ in the early part or the year and in March it was found necessary to introduce 8 gystem of rationing which still remains in force. The distribution of supplies was at first somewhat uneven, leading in one case to public disturbances, but improved during the year. the shortage was to some extent alleviated by suoplies which Q came from the Soviet Union and which were negotiated in a special additional agreement in the summer of 1962. At the pe year's end. the food situation tended to vary from place to | ce and was Ss ‘usually better in the towns, particularly Hevana, : Os ick ct ni i than in the provinces... 4 The worsening of the food Situation was due partly to | lack of local produce as well as imported food, and the need to improve local production led to additional measures being taken n the agricultural field. The most significant step was to milo more freedom of action to the “small farmer op perating in. tune private sector. Medicines were also in short supply, but the situationwas consideraoly improved by the provision by groups | sa the U.S.A. of medicines to. the value cf $60 million in | xchange for prisoners in Cuan, hands. . In the early. part of 1°62 further changes were meade in organisation of those Senartments concerned with forcign enade « The existing three major state enterprises were broken sown into 12 autonomous departments, each dealing with : partioula r branch of import export trade: these were expanded) in December by the addition.of a further three. 6. At the end of the year the President declared that the > previous four-year period had been the stage during which conéitions had been created for‘ the construction of socialism ook in Cuba. The situation had been reached in which 30% of rs  /industrial CONFIDENTIAL ioe vo AW. 56829. ‘Docld:32424580 Page 2
" HW 56829 ‘DocId:32424580 Page 3 CONFIDENTIAL strial production came trom the state sector; about fo the arable land was fermed by a socialist system; ign trade was channelled. through state monopolies; and majority of large scale internal Commerce was in the sO21LaLlist sector. He also ceclared that in the four years ince 1956 the economy hed expanded by 30% x repres senting aA yearly tnerement of between 6 and 7%. At the Same time un- loyment haé been reduced oy over 50% to 9 figure of — , ood, ‘Te The President also declared that it was still the aim to r the Cuban economy from one which was basically n to one which was egrarian-industrial. He did not chat this could be done within the next three years, ed as a major task the need to increase agriculturel th to ensure sufficient food for national require- manvs and vo make some produce available for export. O Sy By the end of 1962 there was nothing to sugcost that, providing bioe eid and technical assistance was forthcoming, the country was in any way near to economic collapse. For some people the deterioration meant 5 a relative reduction in standards which at the same time remained much higher than in many Latin American countries. Certain sectors of the population, particula ly the voutn and the Armed Forces, were better off, or thought they wer then their counterparts in pre-revolution days, Susplies ‘Of équipmens, perticularly tractors, could be “seen arriving in large quantities, giving an impression that a set-back was liable to be temporary only. The greatest shortage remained that of technical skill of even modest scale: a, situetion which the Government.is tackling energetica ‘lly, Dy a wides spread educational programme and the introduction of a basi ‘minimum technical" standard, TL FINANCE Of National Budget. The budget for 1962, announced on January 2, was described ‘ss being a ba leneed budget : end allowed for income and expeniture - of 1,952 million pesos. The breakdown of the budget did not fully account for all expenditure,.particularly in the military cector which must have been high. The largest items were million for the development of the national economy and fails lions for cultural and social services. The income this expenditure was to be derived principally from state organisations (1, O45 million’ pesos ). ‘It seems unlikely cbis. budget was indéed balanced, since at the end of the “resident spoke of the deficdtory nature of the netvionsl J A budget, dre tO heavy expenditure. - ‘He also referred to the low roturn from state ente rprises which, as shown above, were - sprovide the major income for the budget. The Pres fdent als said that current economic development, and that for years 0 come, will be based principelly on ex cterna al finance, not only by long-term eredits but by commercial imbalance. By. this he mea: credit of one form or another from the countries of the comounist bloc. et ie _ /10 " CONPTDEN TTA ! '
LO. Cost of Living. An inflationary situetion has existed throughout 196¢, ui chough public services and rents have becn reduced by Governmental deeree, This inflation has been described as a tnroblem of supolies" and has G officially to be Ue to the redustion in the ployed, the inereasas Li: Wages end the reduction ook of Living in othe noetors mentioned above. xpenditure has been directed on education, public health and defence and the import consumer s00Gs for sale to the public has been severely Limited The shortage of Yood.led to a rise in prices of the unrationed Foods (except for thom at controlled prices) and the cost of meiuls in restaurants generally rose. Prices rose also in the clothins seetor until the nationalisation of these shops in December. There is concenled inflation in virtually all sectors in the reduction in quality of goods, 11. The Government also announced the successful culmination of the sevings campaign. it was stated that at the end of tne year deposits would stand a 524 million pesos, representing an increase of 206 million. pes 308. One of the aims of this savings campaign is to combat she inflation referred to above. ~ de, Figures for note circulation and currency reserves are not available. However, the Cuban National Bank has still not repaid a loan of $25 millions from the International Monetary fund, due in 1959, and has requested a further period of grace extending to 196h.. 13, . During March silver coins of 1 peso, 60 cts. 40 cts. 25, - 20 and 10 cts. were withérawn and replaced by copper-nickel. Pigures of coinage affected were not published. Til AGRICULTURE Tike in danuary Fidel Castro resigned from the Presidency of the Netional Institute: for hevarian Reform (INRA) which ocensioned c 2 time since he haa personally been cl 4 : 2th the land reform, which had been ea on. He was succee ed by Carlos 1. ih qa ‘are - aa 2 non Og Pa aa >t 9 bo ts i pe 1. It was not a good year for Cuban agriculture, far as production was concerned. Government officia concerned with agriculture 4 acknowledged thet agricul? us very low: the sugar yield being one of the Jowest ar producing countries , and that in maize and be , whe reasons given included the jroughs, La of technical knowledge, shortage of trained end MATS , faulty techniques, insufficient pest control vmerect use or lack of fertilisers. In addition the ‘overmment referred to lack of socialist organise tion and a iency to believe that it was enough to draw up a plan and , it would then fulfil itself. ae we oO ft Qu fan Sp ; 4 re) 2 ao @ o) ps oO Sh: Qo nn far i 3 aS. » oO i? tot ry Qu fod pnd re ie) > fhe political eapect of the problem was described by tho ssident as being the most significant. He declared that the |. '-- Iverse effect of the Smought. phoule not be exaggerated’ more ) aa /important ' CONPIDSNE TIAL HW. 56829. DocId:32474580 Page f
HW 56899 re the orgenisuvional problem ms of socialiss 1 the releti hip with the private Secuax. attributed to lack of contributed to the reduction we sgenisation wig soldiienl div ferston, which in vroductivi. V7. Moe drought in the early part of the year was cor ViOPO. It was later annsunced that a group of Russian auor eneineers were surveying the country to advise o OVANCY Subsequently a Hydraulic Institute was so an Institute for the study of soils. apression exercised still working in the ultural land- ig. One cause of low vroduction was by provincial authorities on small far ; sector, and representing 55% o ®o encoura one 211 former, is organised in al Association of Small Farmers (ARAP) a relaxation regerding the killing of animals on a small scale, Qa ao sposal of produce was introduced. The measures were regarded as a temporary expedient only, and the aim to socialise agriculture remains.. Neve rtheless, it is recognised thin the Government that the lack of incentives is at the root of the problem in the private sector, but there are differences of opinion in the way the problem should .be solved. The co- | operatives were declared as having been a failure and 1% was announced that they would be converted into people's farms. At the same time steps were announced to put all state farms of a sound financial and economic basis 19. Agriculture - 5 SUAaT The year began with « gloomy forecast by the Minister for Tadustries that the sugar orop for 1962 would be poor. THe spoke of the labour shortage in the industry, particula sely of cutters, and his emarks preceded the formation of volun%a brigades to do this work. All senior Government officials from "idel Castro dcwnwards subs equently spent some time in the fields cutting cane. On the completion of the suger crop the grinding went on for approximately a month longer ‘oO usual owing to the severe drougn’ in April and May, and it wos finally announced that apoduction of 4.8 million tons had been achieved. 20. Tn December the Minister of Industries again spoke frankly : 9 j 4. v about the situation in-the sugar industry and declared that the cron for 1963, for which preparation head been made during 1962, would be poor. The mador causes were again the shortage of paboue, nrticularly cane cutters. He said that designs for Ze ousting mechines had been completed and targets for the construction of large number s of these during 1962 had been set, hut it was now clear that these tergets were unattainable. He indic ated that enthusiasm of voluntary workers did not ‘ their lack of skill; indeed inexperie enced workers could damage which would take years to repeir. Because of this nosed that in future voluntary workers should work behind , i cutter and not alongside him, i.e. in less skilted jobs. Considerable new planting had, the Minister added, been unnecessary in 1962 as no serious replanting had taken." ° ylace for LO years.  «.: db a [21 CONFIDENTIAL 4 \ Docld:32424580 Page 5