Cuba Dominican Republic Haiti Puerto Rico · Cuba, Dominican Republic, Haiti, Puerto Rico 2nd quarter 1996 May 10, 1996 Cuba Political and economic structures Pages 3-4 Outlook: The

COUNTRY REPORT

Cuba

Dominican Republic

Haiti

Puerto Rico

2nd quarter 1996

The Economist Intelligence Unit15 Regent Street, London SW1Y 4LRUnited Kingdom

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ISSN 0269-5251

Summary

Cuba, Dominican Republic, Haiti, Puerto Rico 2nd quarter 1996

May 10, 1996

Cuba Political and economic structures Pages 3-4

Outlook: The new Helms-Burton bill could hold back economic recovery. Thequestion of property ownership must be addressed if the non-foreign part ofthe economy is to strengthen. Pages 5-6

Review: The Cuban air force shot down aeroplanes piloted by members of aCuban exile group on February 24. An international civil aviation investigationinto the incident has begun. The Helms-Burton bill, which seeks to restrictthird-country investment in Cuba, was signed by the US president, Bill Clinton,on March 12. Later in March the PCC removed from their posts some intellectu-als with foreign contacts. The EU has broken off negotiations on an economiccooperation agreement. The vice-president, Carlos Lage, has called for realismabout the economy. Progress on reform has remained slow. Property reformmay be complicated by the Helms-Burton bill. This year’s sugar crop looks morepromising but most sugar cooperatives are operating at a loss. Heavy industry’sexport earnings have risen. Sherritt International is exploring new investmentpossibilities. The number of tourist visitors leaped by 45% in January-Februaryon a year earlier. Trade between the UK and Cuba fell sharply in 1995.

Pages 6-15

Dominican Republic Political and economic structures Pages 16-17

Outlook: The May 16 election will be closely contested by the leaders of themain opposition parties, José Francisco Peña Gómez of the PRD and LeonelFernández of the PLD. A second-round run-off would favour Mr Fernández.Economic prospects will be tempered by political events and investor wariness.Strong tourism growth will maintain the expansionary momentum of theexternal sector, leading to an improvement in the current-account surplus.However, the high level of political uncertainty will keep the exchange rateunder pressure. Pages 18-20

Review: Election fever has gripped the Dominican Republic as the leadingpresidential candidates jostle to succeed the octogenarian president, JoaquínBalaguer. The three leading presidential candidates have all stated their commit-ment to tight economic policies. The Central Bank, on the other hand, hasintroduced a less coherent monetary policy in an attempt to stimulate domesticdemand as the energy crisis continues to depress activity. Last year’s strong fiscalsurplus was achieved by underfunding state industries. Tourism bookingsappear unaffected by February’s aeroplane crash. The government hopes toimpose import tariffs on certain agricultural foods. Pages 20-25

1

EIU Country Report 2nd quarter 1996 © The Economist Intelligence Unit Limited 1996

Haiti Political and economic structures Pages 26-27

Outlook: The new president, René Préval, faces concerns over security. Theeconomy’s continued revival requires a large injection of foreign aid, which willonly be released once international donors are satisfied that the government isfirmly committed to an extensive privatisation programme. Growth will belimited by grave structural deficiencies over the forecast period. Pages 28-29

Review: Mr Préval’s efforts to attract aid inflows to Haiti have already involveda tour of North America and an historic rapprochement with the DominicanRepublic. The UN added a four-month extension to its peacekeeping mission inHaiti at the end of February. Rony Smarth has been appointed prime minister.The president is to encourage economic utilisation. The controversial privatis-ation agenda has been reactivated, although it still faces strong domestic oppo-sition. The economy experienced positive growth in 1995 for the first time since1988. High aid inflows in 1995 eased supply-side pressures on prices, allowingannual inflation to fall to 25.4%. Pages 29-32

Puerto Rico Political and economic structures Pages 33-34

Outlook: The revival of the independence debate will add to growing un-certainty over Puerto Rico’s political and economic future. Page 35

Review: A new bill in the US Congress proposes to oblige Puerto Ricans tochoose between independence from, and statehood of, the USA in a plebisciteplanned for 1998. This has added to the uncertainty created by doubts over thefuture of Section 936, the island’s major tax break. The Puerto Rican economywas buffeted by fluctuations in productive activity on the US mainland. Thegovernment has predicted that a budget surplus will be recorded at the close offiscal year 1995/96, which ends on June 30. Pages 36-38

Statistical appendices Pages 39-44

Editors:All queries:

David Anthony; Ian Campbell Tel: (44.171) 830 1007 Fax: (44.171) 830 1023

2


Political structure: Cuba

Official name: Republic of Cuba

Form of government: centralised political system with close identification between the Communist Party andthe state

Head of state: president, currently Fidel Castro Ruz

The executive: the Council of Ministers is the highest executive body; its Executive Committee is composed ofthe president, the first vice-president and the vice-presidents of the Council of Ministers

National legislature: National Assembly of People’s Power, composed of 589 members elected by direct ballot

Legal system: a People’s Supreme Court oversees a system of regional tribunals; the Supreme Court isaccountable to the National Assembly

Last national elections: February 1993 (provincial and national assemblies)

National government: the organs of the state and the Communist Party are closely entwined and powerdevolves largely from the Executive Committee of the Council of Ministers

Main political organisation: Partido Comunista de Cuba (PCC)

President of the councils of state & ministers Fidel Castro RuzFirst vice-president Raúl Castro RuzVice-president & economic policy minister Carlos Lage Davila

Key ministers agriculture Alfredo Jordan Morales armed forces Raúl Castro Ruz basic industry Marcos Portal Leon economy & planning José Luis Rodríguez García finance & prices Manuel Millares Rodríguez fisheries Orlando Felipe Rodríguez Romay foreign affairs Roberto Robaina foreign investment Ibrahim Ferradaz García foreign trade Ricardo Cabrisas Ruiz government Wilfredo López health Carlos Dotres Martínez labour & social security Salvador Valdes Mesa light industry Jesús Pérez Othon science, technology & the environment Rosa Elena Simeón sugar Nelsón Torres Pérez tourism Osmany Cienfuegos

Governor of the Banco Nacional de Cuba Francisco Soberón Valdés

Cuba 3


Economic structure: Cuba

Latest available figures

Economic indicators 1991 1992 1993 1994 1995a

GDP Ps bn (constant 1981 prices) 16.98 15.01 12.78 12.87 13.19

Real GDP growth % –10.7 –11.6 –14.9 0.7 2.5

Population m (mid-year) 10.7 10.8 10.9 11.0 11.1

Total exports fob $ m 2,980 1,779 1,137 1,314b 1,526

Total imports cif $ m 7,417 4,234 2,315 1,526b 2,088

Hard-currency external debt $ m 8.4a 8.6a 8,785c 9,083c 9,162c

Exchange rate (av)d Ps:$ 1.0 1.0 1.0 1.0 1.0

May 10, 1996 Ps1:$1

Origins of gross domestic product 1994 % of total Components of gross domestic product 1987 % of total

Agriculture, hunting, forestry & fishing 6.8 Private consumption 94.3

Manufacturing 26.0 Government consumption 9.1

Construction 3.0 Gross fixed capital formation 16.2

Transport & communications 5.5 Change in stocks –1.1

Commerce 22.8 Net exports of goods & services –18.5

Community, social & personal services 28.6 Total 100.0

Total incl others 100.0

Principal exports 1993 $ m Principal imports cif 1994a $ m

Sugar 720 Fuels & lubricants 595

Nickel 157 Food 351

Seafood 100 Chemicals 107

Tobacco 50 Machinery & equipment 92

Citrus fruit 12 Raw materials 31

Main destinations of exports 1993 % of total Main origins of imports 1993 % of total

CIS (incl Russia) 40 Latin America 41

Latin America & Caribbean 16 Canada 6

Canada 15 CIS 3

a EIU estimates. b Preliminary. c Cuban government figure. d Official rate.

4 Cuba


Cuba

Outlook

New US law could slowrecovery

The Cuban economy’s slow recovery could receive a setback from theHelms-Burton bill, passed by the USA in March (see The political scene), whichgives US nationals the right to sue in US courts foreign companies investing inexpropriated Cuban property. Foreign investment has been a key factor in therecovery to date, and while few, if any, established investors are likely to with-draw, the threat of legal action in the USA is likely to give pause to thoseweighing up the pros and cons of going into Cuba. Even if the US president, BillClinton, exercises his prerogative of postponing implementation of the Helms-Burton bill, which seems unlikely, some damage will have been done. The newbill, together with the publicity surrounding the shooting down in February ofan aircraft piloted by Cuban exiles and the political uncertainties sparked by thePartido Comunista de Cuba (PCC)’s new hard line (see The political scene), maywell dent investor confidence. A slowdown in an already small investment flowwill not have a dramatic impact on GDP. The breaking off by the EU of plans tonegotiate an economic cooperation accord is another blow to confidence. Thesedevelopments may hold back a recovery in GDP growth.

Forecast summary

1993a 1994b 1995c 1996d

Real GDP growth (%) –14.9 0.7a 2.5 3.0

Total exports fob ($ bn) 1.14 1.31 1.53 1.60

Total imports cif ($ bn) 2.32 1.53 2.09 2.20

a Actual. b Preliminary. c EIU estimates. d EIU forecasts.

The domestic economymust perform better—

Although the minister responsible for economic policy, Carlos Lage, said theCuban economy was on course during the first quarter of 1996 for a 5% rise inGDP, he warned that the domestic side of the economy would have to make agreater contribution to performance in 1996. This will be hindered by a short-fall in hoped-for inward investment, some of which was expected to helpmodernise the country’s dilapidated industrial infrastructure. The president,Fidel Castro, recently drew attention to the deterioration in sugar harvestingand processing equipment and facilities (see Agriculture), thus emphasising thescale of the problem.

Economic policy-makers are likely to push for improvement in labour prod-uctivity, the least capital-intensive option. Experience shows that a few milliondollars spent on productivity bonuses for workers can have a useful impact,and this policy is likely to be extended selectively, probably in agriculture andin industries with export or export-substitution potential.

Cuba 5


—and the domesticownership question must

be tackled

While sugar and some agricultural and industrial sectors are recovering, thebenefit generated by the tentative decentralisation of farming has been small. Inthe longer run it may be recognised that central management is not the best wayto revive the sugar industry, or indeed many other sectors, especially those suchas agriculture which depend to a high degree on worker motivation. Moreradical changes in management and ownership patterns may finally be seriouslyexamined this year in the light of new external pressures.

Review

The political scene

Cuban air force shootsdown exile group’s

aircraft—

In recent months the political climate has become harsher. The US govern-ment has sought to tighten its embargo on Cuba, while the Cuban governmenthas dismissed the head of the Centro de Estudios sobre América (CEA) in anapparent effort to curb contacts with the outside world. But the deteriorationin the political climate began with a surprising and tragic development. OnFebruary 24 Cuban air force MiG jets shot down two small aeroplanes belong-ing to a Cuban exile group in the USA, Brothers to the Rescue. The US coast-guard failed to find either the pilots or the remains of the aircraft. Brothers tothe Rescue has become more openly political since the flood of refugees slowedto a trickle following the September 1994 migration agreement betweenHavana and Washington. Previously it had rescued Cubans trying to cross theFlorida Straits to Miami. Its aeroplanes had flown into Cuban airspace severaltimes during the past year, sometimes dropping leaflets over Havana. TheCuban authorities warned that action would be taken if violations of its air-space continued but the shooting down of the aeroplanes provoked shock, inCuba and elsewhere.

The Cuban president, Fidel Castro, told a US magazine, Time, that he “acceptsresponsibility for what occurred”. He said that Brothers to the Rescue, whichowned the two aircraft, had begun as a humanitarian organisation but hadturned to “serious terrorist actions” under the auspices of the Cuban AmericanNational Foundation, the main anti-Castro organisation in the USA. It hasbeen suggested that the decision to make an example of the pilots was takenunder pressure from military and civilian hardliners.

—and an internationalenquiry begins

International Civil Aviation Organisation (ICAO) experts arrived in Cuba onMarch 24 to investigate the incident. An ICAO meeting in Montreal decided tocarry out a full investigation rather than accede to a US request for immediatecondemnation. The UN Security Council backed an enquiry although, imme-diately after the incident, the USA had succeeded in forcing a vote stronglycriticising the Cuban action, without hearing the Cuban version of the event.

Further violations ofairspace occur

Cuba says two further violations of its airspace took place on March 23 and 24,involving four light aircraft which had flown from the USA. Havana had earliersaid that it would consider prohibiting flights by all US aeroplanes throughCuban airspace if Washington failed to take adequate steps to curb such actions.

6 Cuba


Although Cuban aircraft are banned from overflying the USA, Havana has so farallowed US aircraft to fly over the island on agreed flightpaths.

Washington toughens theembargo—

The most immediate and long-term effect of the shooting down of the Brothersto the Rescue aeroplanes was to give impetus to the Helms-Burton bill (1stquarter 1996, page 6), the US legislation aimed at strengthening internationalsanctions against the Castro government and halting foreign investment in theCuban economy. An amended version of the Helms-Burton bill was signed bythe US president, Bill Clinton, on March 12. In doing so, he relinquished thepresidential right to end the Cuban embargo, which can now only be lifted bycongressional decision.

—angering NAFTA allies— Mr Clinton’s decision to sign the Helms-Burton bill also attracted internationalanger. Most democratic governments saw his decision to crack down on third-country investment in Cuba as an extreme reaction and as an unwarrantedinterference in free markets. Canada and Mexico, Washington’s partners in theNorth American Free Trade Agreement (NAFTA), said the Helms-Burton billinfringes NAFTA.

—and raising thepossibility of WTO conflict

European Union (EU) officials were also critical and sources close to the officeof the EU commissioner, Sir Leon Brittan, say that the European Commissionis seriously considering raising the matter with the World Trade Organization(WTO). In the UK there were calls to the president of the Board of Trade for arobust response to protect UK nationals if they are subjected to litigation ordenied visas under the new act.

Spain is also against theUS stance

Both Spain’s outgoing government and the Partido Popular (PP), fresh from itsgeneral election victory, voiced their criticism. The Spanish foreign affairs min-istry said the law “does not favour a peaceful transition on the island”. A PPdelegation met US parliamentarians and argued for “the elimination of possiblesanctions against third-country business people”. This disappointed Jorge MasCanosa, president of the anti-Castro Cuban American National Foundation andan architect of the new law, who had flown to Spain in an attempt to enlist PPbacking to halt further Spanish investment in Cuba. He received a cool recep-tion from Spanish businesses involved with Cuban trade and investment.

Helms-Burton bill targetsinvestors—

The Helms-Burton bill gives US nationals the right to sue in US courts foreigncompanies investing in expropriated Cuban property. It extends the definitionof US nationals to those who became US citizens after the expropriation, thusincreasing the number of potential litigants. Executives of foreign companiesconsidered to be “trafficking” in nationalised property, and their families, maybe denied visas to enter the USA.

The US president must compile an annual report listing all bilateral assistance,including humanitarian aid, to Cuba; all foreign trade, including the identityof Cuba’s trading partners; and a full report on joint ventures completed, orunder consideration, involving facilities in Cuba. The latter category must givedetails of the location of the facilities, the terms of agreement and the names ofthe parties. The amount of any Cuban debt exchanged, forgiven, or reduced inagreement with a foreign company must be reported. The act calls for action to

Cuba 7


bring about a mandatory international embargo on trade with Cuba, and toblock Cuban membership of international financial institutions and Cubanaccess to loans or financial assistance from such bodies.

—but Mr Clinton gets aloophole—

However, Mr Clinton has been given a loophole. The original bill was modifiedby the conference committee to give a period of grace to companies whoseCuban activities might come within its scope. The new law applies to those whotraffic in confiscated property after November 1, 1996, ie three months after theeffective date of Title III which legislates for the protection of US property rightsabroad, thus allowing companies time to wind down their Cuban operations.

Moreover, the president may suspend the effective date of Title III for succes-sive six-month periods, providing the first such suspension is made at least15 days before the effective date. However, the committee made it clear that itdid not believe the president would be justified in exercising this right undercurrent conditions.

—and Cubans dismiss“intimidation” efforts

An official statement by the Cuban foreign trade ministry said the Helms-Burtonbill ignores the fact that the Cuban expropriation and nationalisation process“rigorously followed the established norms of international law”. It notes thatcompensation was paid to expropriated owners except for those in the USA,where measures taken by Washington made it impossible. The foreign tradeministry’s “willingness and ability” to fulfil business agreements was stressed.

The party cracks down onintellectuals with foreign

contacts—

The Central Committee of the Partido Comunista de Cuba (PCC) held a ple-nary session on March 23. In one of two major reports to the plenary the armedforces minister and PCC second secretary, Raúl Castro, complained that intel-lectuals and self-employed workers were being “used by Cuba’s enemies toweaken the authority of the party and the state” and should be brought backinto line. Shortly before this speech a number of intellectuals were reportedlydismissed from their job, the most prominent among them being the directorof the Centre for Study of the Americas, Luis Suárez. In his speech GeneralCastro accused certain US academic centres of open interventionism; he de-manded an investigation of other academic centres, including the EuropeanStudies Centre.

This crackdown would appear to mark a modification in the government’spolicies on intellectuals’ contacts overseas and their freedom to criticise. In thepast three or four years the government has been more willing to toleratediscussions between Cuban intellectuals and foreigners, and intellectuals havealso enjoyed a certain amount of freedom to speak frankly about Cuba’s policyproblems. As has happened before, a tougher policy in Washington seems tohave been used as justification for a tougher policy in Havana.

—and the EU breaks offnegotiations on economic

cooperation

Cuba suffered a further major blow to its international relations on May 7. TheEU dropped its plans to negotiate an economic cooperation agreement withCuba. A spokesman for the European commissioner responsible for LatinAmerican Affairs, Manuel Marin, said that the EU and Cuba were divided by“ideological disagreements”. Mr Marin was reported to have been disappointed

8 Cuba


at the lack of progress towards enhancing civil liberties and private initiative.The crackdown on intellectuals in March is likely to have disappointed the EU.

On May 16 the Cuban foreign minister, Roberto Robaina, played down thebreakdown in relations, saying that Cuba had not been in a hurry to reach anagreement. But the worsening of relations with Europe must be considered aserious blow. The EU has sought to support the government’s efforts at reform.Its gentle approach has been in marked contrast with that of the USA. NowCuba is left still more isolated internationally.

Economic policy

The vice-president callsfor economic realism—

In the Central Committee plenary session of the Partido Comunista do Cuba(PCC), a vice-president and the minister responsible for economic policy, Car-los Lage, stressed the need for realism in assessing economic progress to date.He said that the economy was on course for growth this year of 5% but thatgreater “domestic input” was required. By this he implied that much of thepresent growth is being produced by foreign investment in, for example, tour-ism and mining.

—as excess liquidity andlack of output continue to

dog the economy

The economy continues to face interrelated financial and productive problems.By introducing some taxes, raising the prices of some goods and cutting subsi-dies to state enterprises the government has reduced its budget deficit(1st quarter 1996, page 9). But there continues to be excess peso liquidity in theeconomy, much of it probably held by about one-tenth of the population; ifthe government were to liberalise prices, the resulting inflation would have aserious impact on the bulk of the population. The government has not yetfound a way to drain the excess liquidity held by a relatively small part of thepopulation.

An insufficient supply of goods is a related problem. Legislation on employ-ment and property continues to inhibit the development of a private economy,as does the lack of a commercial banking system. The government might beable to help by pressing ahead more quickly with employment, property andfinancial reforms, which would move the economy away from central plan-ning towards a free-market system.

Property reform iscautious—

However, the government is being cautious, as evidenced in the case of prop-erty law. Foreign investment in real estate was legalised by Law 77 of September1995, but details of the promised new property law have not yet been madepublic. Real estate looks set to follow the pattern of other sectors, with thegovernment trying to maximise investment commitments under current con-ditions before granting further concessions. Statements by Cuban officials inthe wake of a new real estate deal (see Investment) suggest the government isinterpreting property law cautiously, possibly with a view to avoiding US law-suits under the Helms-Burton bill. An official said that “the policy is not to sellexisting buildings but to sell buildings planned for construction in the future”.While this could see new offices, holiday villages, condominiums and residen-tial premises going up in Havana and elsewhere on the island, it appears toblock deals involving properties such as the pre-revolution mansions on prime

Cuba 9


Havana sites. The domestic political complications which could arise fromattempts to put old buildings on the market without offering Cuban tenants orowners suitable alternative accommodation are also likely to have been takeninto consideration.

—and Helms-Burtoncomplicates matters

The authorities are likely to be anxious to avoid legal wrangles under theHelms-Burton bill which could hold up investment in real estate indefinitely.While spokesmen have vociferously denied that expropriated owners have anyrights to land or property in Cuba, few doubt that there will be lawsuits. Nearly140,000 housing units were confiscated by the state between 1960 and 1974when their owners emigrated. Offices, hotels, factories and other commercialpremises could also be claimed by Cuban-Americans. Land ownership providesanother rich field for litigation. Over 42,000 farm units were nationalisedunder the 1959 Agrarian Reform Law, and a further 10,000 under the 1963 law.

The economy

Brazil looks at telecomsoption

Brazil and Cuba have signed an agreement covering the exchange of telecom-munications expertise. Discussions between the two countries’ commun-ications ministers covered the sale of digital switchboards, the possibility oflaying underwater cables, a pilot project testing the use of telephones operatedby phone cards and Brazilian involvement in modernising Cuban telecom-munications. Cuba’s biggest inward investment agreement to date, the tele-coms modernisation joint venture formed with the Mexican company, GrupoDomos, in June 1994, may well have collapsed, leaving the field open onceagain to new contenders.

Agriculture

The sugar crop looksbetter—

Sugar market analysts appear to be taking seriously Cuban claims that the1995/96 crop will stop the slide in sugar production begun in 1990. Manyaccept that the final total may be close to recent Cuban forecasts of 4.5m tons.By April 4 production was reported to have passed 3.3m tons, and on April 16the president, Fidel Castro, said that it had reached nearly 3.8m tons. The1994/95 crop was 3.4m tons, raw value, the smallest in over 50 years.

There is a long way to go, however, before Cuba makes up the falls in productionand exports since the late 1980s, when crops of 8m tons were normal. Thecurrent harvest has suffered from unseasonal rains and has been characterised,as usual, by urgent appeals to labour to work harder. This year’s partial reboundin sugar production is being made possible by imports of essential industryinputs, financed by foreign banks and trade houses.

—but most of thecooperatives operate at a

loss—

A recent article in the English-language edition of the Partido Comunista deCuba (PCC) organ, Granma International, disclosed that 77% of over 1,500so-called Unidades Básicas de Producción Cooperativa (UBPCs) growing sugarcane were operating at a loss, against 50% of a similar number of non-caneUBPCs. Most of the cane UBPCs were hurriedly set up in the autumn of 1993in a restructuring of the integrated mill-plantation complexes run by the sugar

10 Cuba


ministry. This, in turn, was part of a broader reorganisation of the entire statefarm sector in response to Cuba’s economic crisis. The UBPCs now have theuse, although not the ownership, of 80% of the cane area, but are still directedby the sugar ministry.

—and planting delaysraise concerns for new

harvest

Planting for next year’s harvest is well behind schedule, according to the Cubannational news agency, Agencia de Información Nacional (AIN). Only 78,380acres of new sugar cane had been planted in the four months to April 30, whichis less than half the target figure of 166,526 acres. No reason was given for thedelay, but a labour shortage, as available workers concentrate on harvesting,could be a major problem.

Sugar production and exports(m tons, raw value)

Year Production Exports

1987/88 7.5 6.4

1988/89 8.2 7.5

1989/90 8.2 7.0

1990/91 7.7 6.6

1991/92 7.1 6.4

1992/93 4.4 4.0

1993/94 4.0 3.3

1994/95 3.4 2.8Source: F O Licht.

Industry

Heavy industry increasesdollar earnings

Cuba earned $415m in hard currency from its heavy industry sector in 1995,according to Cuban media reports, with nickel contributing $90.8m of the total.Overall, the 11 industries which comprise Cuba’s basic industry sector, includ-ing nickel, oil, rubber and chemicals, claimed to have achieved a 24% increasein production in 1995, with higher labour productivity and lower costs.

Iron and steel sectorcashes in on tourism

One encouraging sign of the formation of linkages in the economy is higherproduction by the iron and steel sector of goods for the tourism sector. Cubanmedia reports say the iron, steel and machine tools industry produced goodsworth $25m for the tourism sector in 1995, up sharply from $2m in 1994.

Foreign investment

Foreign companies facepossible lawsuits under

Helms-Burton bill

The Helms-Burton bill will make it harder for Cuba to attract foreign invest-ment, although government spokesmen say no investor has announced plansto pull out of the country. They admit, however, that many potential investorshave been waiting to see the effect of the act and that fewer commitments arelikely.

The requirement that the US president report annually to the appropriate con-gressional committees on trade with, and assistance to, Cuba from other foreigncountries puts all Cuba’s private and government partners under the spotlight.

Cuba 11


The presidential reports must include details of joint ventures completed, orunder consideration, by foreign nationals and business firms in Cuba; locationof the facilities; the terms of agreement and the names of the parties; andwhether or not any of the facilities is the subject of a claim against Cuba by a USnational. Multinational companies, some of them British, may be the first toface lawsuits in US courts under the act.

Sherritt explores newinvestment openings—

A Canadian company which is probably the largest foreign investor in Cuba,Sherritt International, is planning to expand its investment base from oil andnickel to other key industries, including communications, finance, transport-ation, real estate and sugar. One area thought to be under consideration istelecommunications. This has become a possibility now that the government’sjoint venture with the Mexican company, Grupo Domos, has run into difficul-ties (1st quarter 1996, page 14).

Sherritt holds a 25% interest in the Meliá Las Americas hotel in Varadero,Cuba, and a 12.5% interest in a hotel under construction in Havana. It has 50%of a 200-ha market gardening joint venture, whose produce is being sold tohard-currency markets in Cuba and for export.

—and announces capitalinvestment plans for

nickel

Sherritt has allocated around $165m to capital development between now andthe turn of the century at its Moa Bay mining and processing facility in easternCuba. Total 1995 output at Moa was 20,651 tons, nearly 65% more than the12,549 tons produced in 1994. The metals division recorded earnings of $7.5mon revenue of $20.8m for the 38-day period ended December 31, 1995, the firstoperating period since Sherritt’s Cuban interests were hived off to SherrittInternational.

Executive housing receivesEuropean cash—

A joint venture to build executive housing in Havana has been formed betweena group of Monaco-based companies and Cubalse, a Cuban enterprise whichsupplies goods and services to the hard-currency sector in Cuba. RealInmobiliaria plans to build 600 luxury flats in three of Havana’s most sought-after residential areas. Construction is scheduled to begin in mid-1996 and tocontinue for five years. The two- to five-bedroom flats will be sold or leased forhard currency. Most of the foreign capital is believed to be Italian, with aFrench minority share.

—as Israeli group expandsinto office building

Cubalse has also signed a property deal with a subsidiary of the Israeli BMGroup. BM is already involved in citrus cultivation in Cuba. The new ventureplans to build an office and shops complex, with car parking facilities, on a150,000 sq metre area in Havana.

Estate agency investigatesCuba opening

An estate agency chain, Re/Max, may open a Cuba office through Oikos, aMadrid company which holds one of several Re/Max franchises in Spain. Oikoshas drawn up a letter of intent with a Cuban firm, and would mainly markettourist apartments, targeting Canada, Mexico and Europe. Oikos says it wouldbe linked with Re/Max agencies in the USA and Canada as well as in Europe.

Spain signs infrastructureaccord

Spain’s public works and transport minister has signed a memorandum of un-derstanding covering 14 infrastructure projects in Cuba. The agreement covers

12 Cuba


projects already under way, such as the renovation of houses in central Havana,and new projects including a water treatment scheme on the Almendares river.They will be undertaken by the relevant departments of Spain’s public works,transport and highways ministry, although some private-sector participation isexpected.

Tourism

Minister expects moretourists in 1996—

The tourism minister, Osmany Cienfuegos, told an Ibero-American tourismconference in Havana that Cuba received 197,570 visitors in January andFebruary, 45% more than the in same period of 1995. Mr Cienfuegos claimedthat 1996 would see “a definitive take-off” in Cuban tourism.

—and longer-term costsand prospects are

evaluated—

The tourism vice-minister, Eduardo Rodríguez de la Vega, has put the cost ofCuban tourism development to the year 2000 at Ps2.4bn, of which Ps1.38bnwill be in convertible currency. He said that $150m is needed for infrastructure,roads, sewerage and drainage systems, communications etc, and $213m fortransport development.

According to Mr Rodríguez, only 22% of the hoped-for 25,000 new hotel roomswill be built via joint ventures. Increasing that percentage would depend onconditions negotiated with joint-venture partners. Up to the end of September1995, the tourism ministry had negotiated 144 deals with foreign companies.Of these, 31 each were from Spain and Italy, 22 were Canadian and 12 French.

—as doubts emerge aboutfinancing

Tourism earnings, put at around $1bn for 1995, are projected to continue risingto the turn of the century, when 2 million visitors should generate gross earn-ings of $3bn. But tourism is import-intensive: the outflow on imported inputsneeded to meet tourism-related demand is estimated to be 70% of foreign ex-change earnings from tourism. There is intense competition for increasinglylimited central state funding: the total investment element in the budget fell by33% in the period 1989-93 and the trend is downwards for 1995 and 1996,although there was a rise in 1994. State tourism enterprises have limited free-dom to reinvest earnings; Gaviota, the smallest hold chain, reportedly handsover 44% of earnings to the state.

Trade

UK-Cuban trade falls— In what was probably a reflection of the fall in available foreign exchangebecause of the poor sugar crop, UK exports to Cuba fell by 27.6% in 1995 to£19.2m. UK imports from Cuba were down by 23.1% to just £8.1m. A rise in1994 had reversed the downward trend caused by Cuba’s economic crisis andpayments arrears on imports. The fall in trade in 1995 shows that the externalsector of the economy continues to be very weak.

—and Venezuela acceptsmedicines for debt

Cuba’s lack of foreign exchange has led to innovative agreements in trade anddebt. An example of this is that the Venezuelan government has agreed toaccept Cuban medicines in part-payment of debt. Talks with the FederalRepublic of Yugoslavia have discussed repaying debt with sugar, coffee, nickel

Cuba 13


and food products. The Cuban side has indicated that Havana hopes this willboost bilateral trade and said Cuba is interested in importing Yugoslav process-ing machinery, medical instruments and transport equipment.

UK trade with Cuba 1991-95(£ m)

Year Imports Exports

1991 17.87 28.39

1992 12.98 28.35

1993 8.00 14.01

1994 10.63 26.46

1995 8.18 19.16Source: UK Customs & Excise data.

Dispute leaves sugarshipments to Russia in

limbo

Three or four shiploads of Cuban sugar were left stranded in the Black Sea inApril, as a result of a dispute between a Russian company, Alfa-Eko, and Cubanexporters. One of two Russian trading companies operating the 1995-96 sugar-for-oil swap between Moscow and Havana, Alfa-Eko, said it was not prepared tocontinue trading on present terms and claimed there had been substantialdelays in Cuban sugar shipments. The Cubans said they had the sugar to fulfiltheir side of the deal. Alfa-Eko is likely to demand improved terms from theCubans following the recent rise in world oil prices. Talks have been held toresolve the difficulties which, Cuba said, were technical and commercial. Theother Russian company operating the sugar-for-oil deal, Menatep-Impex, saidit would continue on the agreed terms.

Tobacco sector emergesfrom the ashes—

Tobacco and cigar exports brought in $100m in 1995, but the state tobaccoexporting enterprise, Habanos, says it has tapped only about half its potentialworld market. This year’s tobacco crop is expected to reach 750,000 quintales,compared with 650,000 quintales last year, making 65m cigars available forexport; 1993 output was just 300,000 quintales (13,800 tons).

The recovery in tobacco production is linked to pre-financing agreements witha Spanish company, Tabacalera, and a smaller deal with Seita of France, whichbetween them ensured the necessary inputs for both the agricultural andmanufacturing sides of the industry. Other factors were the leasing of state landto private farmers for extra tobacco cultivation (tobacco is grown mainly byprivate farmers) and bonuses for efficient tobacco workers on the land and inthe factories.

—and targets the UK fornew cigar launch

Cuban cigar exporters are confident enough of their supply to launch a newcigar on the UK market in November. The figurado, a traditional torpedo-shaped cigar, is to be relaunched following a decline in popularity in the 1930s.The new version of this small cigar, to be named the cuaba, an indigenousTaino word for a quick-burning bush, will be sold in four sizes.

Caribbean companiespromote trade—

Representatives of 25 Caribbean companies visited Cuba in March to promotetrade in food, construction materials, chemicals, footwear, electronic equipmentand packaging materials. Several letters of intent were signed. Members of themission, organised by the Caribbean Export Development Agency, said theabsence of US companies makes Cuba a potentially lucrative market for

14 Cuba


Caribbean companies. Barbados and Cuba signed an investment protection andpromotion accord in February, the first between Cuba and another Caribbeancountry. A Caribbean trade fair will be held in Santiago de Cuba on June 24-30.

—and economic relationsresume with the Czechs

The Czech Republic, whose commercial relations with Cuba have been negli-gible since 1989, is increasing its presence on the island. Czech technicianswere involved in the completion of a 125-mw block at the Felton thermo-electrical plant. Other agreements completed or under negotiation include themodernisation of the Nuevitas thermoelectrical plant; the manufacture ofsmall generating units utilising alternative energy sources, such as sugar-caneby-products; and the sale to Cuba of 20 locomotives and of trucks and spareparts. Czech companies are interested in glass and textiles production, motor-bike assembly and work on the Juragua nuclear plant, while Cuba’s links withCaricom and the Association of Caribbean States could prove useful to theCzech Republic.

Cuba 15


Political structure: Dominican Republic

Official name: Dominican Republic

Form of government: representative democracy with a US-style Congress and presidency

Head of state: president, currently Joaquín Balaguer

The executive: the president has executive power, appoints a cabinet of 12 secretaries of state and holds officefor up to four years

National legislature: bicameral Congress, both houses directly elected; upper house, the Senate, has30 members, one for each province and one for the national district; lower house, the Chamber of Deputies,has 120 members who are elected every four years

Legal system: there are local justices covering 72 municipalities and 18 municipal districts; each province actsas a judicial district; the highest court in the land is the nine-member Supreme Court of Justice appointed bythe Senate

Last national elections: May 16, 1994

Next national elections: May 16, 1996 (presidential); May 16, 1998 (legislative)

National government: Joaquín Balaguer’s PRSC holds 14 of the 30 Senate seats but accounts for only 50 ofthe 120 deputies. The opposition PRD has 15 senators and 57 deputies

Main political organisations: government—Partido Reformista Social Cristiano (PRSC)opposition—Partido Revolucionario Dominicano (PRD); Partido de la Liberación Dominicana (PLD); UnidadDemocrática (UD)

Members of cabinetPresident Joaquín Balaguer RicardoVice-president Jacinto Peynado

Secretaries of state agriculture Virgilio Alvarez Bonilla armed forces & defence Rear-Admiral Ivan Vargas Céspedes education, fine arts & public worship Jacqueline Malagón finance Roberto Martínez Villanueva foreign affairs Caonobo Javier Castillo industry & commerce Juan González Pérez interior & police Atilio Guzmán Fernández labour Rafael Alburquerque public health & social welfare Victorio de Jesús García Santos public works & communications Ricardo Canalda sports & recreation Francisco Torres tourism Frank Jorge Elías

Governor of the Banco Central de la República Dominicana Héctor Váldez Albizú

16 Dominican Republic


Economic structure: Dominican Republic



GDP Ps m 96,333 112,698 121,808 136,206 160,456

Real GDP growth % 1.0 8.0 3.0 4.3 4.7

Consumer price inflation (av) % 53.9 4.5 5.3 8.3 11.7b

Population m 6.9 7.0 7.1 7.2 7.3

Exports fob $ m 658 562 511 633 765

Imports fob $ m 1,729 2,174 2,118 2,276 2,588

Current account $ m –157 –708 –425 –159 51

Reserves excl gold $ m 441.9 499.8 651.2 252.1 365.6

Total external debt $ bn 4.5 4.6 4.8 4.3 4.1c

Debt-service ratio % 13.1 15.3 13.9 19.6 17.0c

Exchange rate (av) Ps:$ 12.69 12.77 12.68 13.16 13.6

May 3, 1996 Ps13.98:$1

Origins of gross domestic product 1995b % of total Components of gross domestic product 1995 % of total

Agriculture 11.4 Private consumption 74.7

Mining 2.9 Government consumption 4.1

Manufacturing 18.2 Gross fixed capital formation 23.4

Construction 9.4 Increase in stocks 0.1

Transport & communications 9.6 Exports of goods & services 26.6

Wholesale & retail trade 13.3 Imports of goods & services –30.0

Financial services 5.7 Total 100.0

Government 8.5


Principal exports 1994 $ m Principal imports cif 1993 $ m

Ferro-nickel 181.1 Primary goods 259

Sugar 117.1 Intermediate goods 178

Coffee 62.7 Consumer goods 48

Cocoa 55.5

Tobacco 17.6


USA 46.6 USA 65.2

Germany 5.9 Mexico 7.0

Canada 4.8 Venezuela 6.8

Belgium-Luxembourg 4.6 Japan 6.3

a Central Bank estimates. b January-September. c EIU estimate.

Dominican Republic 17


Dominican Republic

Outlook

Mr Peña Gómez looks setto win the first round of

the presidential election—

Political tension is mounting as the May 16 presidential election approaches.The leader and presidential candidate of the opposition Partido RevolucionarioDominicano (PRD), José Francisco Peña Gómez, has seen a considerable increasein his support in recent months. A March Gallup poll gave him 43% of the vote,10 percentage points ahead of his closest rival, Leonel Fernández of the Partidode la Liberación Dominicana (PLD). Mr Fernández, who trailed Mr Peña Gómezby only 1% back in November, may have lost support due to his close associa-tion with the current president, Joaquín Balaguer. However, victory for Mr PeñaGómez is not a foregone conclusion. The EIU believes that the PRD leader willwin the May 16 vote but not with a large enough majority to avoid a secondround run-off against Mr Fernández. The electoral prospects of the officialPartido Reformista Social Cristiano (PRSC) candidate, Jacinto Peynado, are poorbecause his campaign, which was barely supported by Mr Balaguer, never reallygot off the ground.

—but could lose toMr Fernández in the

second round

A constitutional amendment following Mr Balaguer’s dubious victory in the1994 presidential election provides for a two-round election this year if theMay 16 vote does not produce an outright victor. Disaffected supporters of theruling PRSC are likely to play an important role in the election. Longstandingacrimony exists between the PRSC and the PRD, and poll results indicate thatMr Peña Gómez could lose to Mr Fernández in a second-round run-off, to beheld by June 30, as the majority of PRSC votes would be transferred toMr Fernández. Political tensions are likely rise in the event of a close second-round victory for Mr Fernández as disgruntled PRD supporters question theperformance of the electoral board.

The possibility ofMr Balaguer remaining in

power appears remote

There have been suggestions that Mr Balaguer, who grudgingly agreed to short-en the current presidential term to two years and not contend the 1996 electionfollowing his acrimonious election in 1994, may be manoeuvring to ensure thathe remains in power, albeit as a compromise candidate, in the event of a closesecond-round result between the PRD and the PLD. Balaguer supporters havebeen vociferous in their demands for the president to serve a further two years.Although Mr Balaguer may be reluctant to relinquish the power he has held forthe past 30 years, he is unlikely to renege on the 1994 agreements, as would onlyserve to heighten political uncertainty and could damage the fledgling eco-nomic recovery in the Dominican Republic (see The economy).



Little change is promisedin economic policy—

The three leading presidential candidates have pledged to continue the mainthrust of the current administration’s economic policies, which include:

• single-digit inflation;

• steady economic growth of 4-6%;

• fiscal rectitude; and

• promotion of exports and foreign investment.

Behind these general assurances, however, there may be differences over spe-cific issues, notably the privatisation of loss-making state enterprises. While itis hard to see any serious alternative to divestment in the case of the virtuallybankrupt electricity and sugar corporations, these organisations will requiresubstantial refinancing before they can be privatised.

—although a loosening offiscal and monetarypolicies is probable

The candidates’ pledge to retain the fiscal rectitude implemented by the latestBalaguer administration, which produced a Ps1.7bn ($123.1m) public-sectorsurplus last year, is almost certain to be tested in 1996-97. The incomingadministration will be under pressure to produce tangible improvements in theeconomy, and may feel obliged to increase social spending and to raise public-sector wages. This, in turn, will accelerate inflation. On the monetary side thetight policies of last year, which helped curtail inflation, have been loosenedsomewhat in early 1996. In an attempt to stimulate domestic demand theBanco Central de la República Dominicana (the central bank) has eased itstough credit restrictions, while introducing several safeguards to counter risinginflationary pressures and keep inflation in single figures in 1996. However,given the opacity of the central bank’s recent monetary stance, the EIU main-tains its forecast of an annual rate of 12%. The slump in business confidencecaused by continuing electricity shortages will be exacerbated by acute politicaluncertainty, particularly in the event of a close election. These factors are likelyto offset the demand stimulus provided by looser macroeconomic policy. As aresult, growth will slip to 3.0% in 1996, rising to only 3.4% in 1997.

The current account willremain in surplus—

Poor prospects in 1996 for commodity prices, with the exception of nickel, willrestrict export growth this year, although firm gold prices may provide somerespite. However, the state gold producer, Rosario Dominicana, does not ap-pear to be in a position to realise the full benefit of the current gold price of$390/oz. Tourism-related demand will fuel imports, with a consequent expan-sion in the trade deficit. Tourist bookings have remained unexpectedly firm inthe first half of 1995 in spite of the adverse publicity surrounding the Februaryaeroplane crash (1st quarter 1996, page 26), and are expected to show stronggrowth this year. A good performance by tourism will underpin GDP growthand, together with high returns from the communications sector and increas-ing migrants’ remittances, will help to swell the current-account surplus.

—but the exchange ratemay continue to slide

The EIU’s projection of a weakening exchange rate in the first half of 1996(1st quarter 1996, page 24) has been borne out by the slide in the Dominicanpeso in the first four months of 1996: it fell to Ps13.98:$1 by early May,compared with Ps13.47:$1 at end-1995. Political uncertainty resulting from aclose victory for either of the two leading presidential candidates is likely to



maintain downward pressure on the peso. The supply of foreign exchange maybe restrained until late 1996 as foreign investors, even in the buoyant tourismsector, delay projects until the outcome of the election is confirmed and thepolicies of the new government are clearly expressed. In the absence of pro-longed civil unrest, the arrival of the winter tourism season should boost for-eign exchange earnings in the final quarter. The exchange rate will decline toaround Ps14.3:$1 by end-1996.

Forecast summary

1994a 1995b 1996c 1997c

Real GDP growth (%) 4.3 4.7 3.0 3.4

Consumer price inflation (%; year-end) 14.3 9.2 12.0 11.0

Merchandise exports fob ($ m) 633 765 840 950

Merchandise imports fob ($ m) 2,276 2,588 2,800 3,000

Current account ($ m) –159 51 65 80

Exchange rate (Ps:$; year-end) 13.2 13.6 14.3 14.7

a Actual. b Central Bank estimates. c EIU forecasts.

Review

The political scene

Mr Peña Gómezstrengthens his lead

Support for the presidential candidate of the opposition Partido RevolucionarioDominicano (PRD), Jose Francisco Peña Gómez, has strengthened in the run-upto the May 16 election, according to a Gallup poll published in early March. Thesurvey indicated that 43% of voters backed Mr Peña Gómez, compared with37% in November. In the same period support for the other leading presidentialcandidate, Leonel Fernández of the Partido de la Liberación Dominicana (PLD),slipped from 36% to 33%. Although the share of the candidate of the governingPartido Reformista Social Cristiano (PRSC), Jacinto Peynado, rose from 16% to

0

1

2

3

4

5

6

1993 94 95(a) 96(b) 97(b)

Dominican Republic

Latin America

Gross domestic product % change on previous year

(a) Preliminary estimates from the Banco Central de la RepublicaDominicana for Dominican Republic; EIU estimates for LatinAmerica. (b) EIU forecasts. (c) Nominal exchange rates adjustedfor changes in relative consumer prices.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.

70

80

90

100

110

120

1990 91 92 93 94 95(a) 96(b) 97(b)

Dominican peso: real exchange rate (c)1990=100

Ps:$Ps:$Ps:$Ps:$Ps:$Ps:$Ps:$Ps:$Ps:$Ps:$Ps:$Ps:$Ps:$Ps:$Ps:$Ps:$Ps:$Ps:$Ps:$

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18%, the current vice-president continues to languish behind his oppositionrivals and appears to have little chance of reaching a second-round run-off inJune. Mr Peynado has conspicuously failed to gain the support of the octogen-arian president, Joaquín Balaguer, who appears to favour the candidacy ofMr Fernández.

Vice-presidentialcandidates are chosen—

The PLD and PRSC named their vice-presidential candidates in March, shortlybefore the deadline for nominations. The PLD’s candidate is a doctor from theCibaol region, Jaime David Fernández Mirabel, who is currently the PLD’s solesenator. The PRSC choice was a lawyer and vice-president of the Gassó pharma-ceutical company, Maribel Gassó Diez. Ms Gassó’s lack of previous politicalinvolvement caused some PRSC activists to protest against her nomination.

In contrast to the two last-minute nominations, the PRD re-elected the vice-presidential candidate of the 1994 elections, Fernando Alvarez Bogaert of theUnidad Democrática group, one of the parties in coalition with the PRD. ThePRD has registered alliances with nine other parties, including three whichdefected from the PRSC camp (4th quarter 1995, pages 21-22). The PRSC iscampaigning in collaboration with two small parties, the Partido Liberal de laRepública Dominicana and the Partido Demócrata Popular. The PLD is contest-ing the election on its own. The electoral board also accepted presidential andvice-presidential candidates from three minor parties, the Partido del PuebloDominicano, the Movimiento de Conciliación Nacional and the Alianza SocialDemócrata.

—as controversy breaksout

The Catholic archbishop of Santo Domingo, Cardinal Nicolás de Jesús LópezRodríguez, caused a stir in late February by claiming that the US embassy wasseeking to intervene in the election by supporting a citizens’ network of elec-toral observers, the Red de Observadores Electorales (ROE). The network wasformed by a civic group, Participación Ciudadana (Citizens’ Participation). Thisobserver organisation currently receives funding from several internationalagencies including USAID. The funds are administered by a Catholic university,Pontificia Universidad Católica Madre y Maestra.

The university claimed that the US assistance was for a project to strengthendemocratic institutions and to contribute to a clean and transparent election.However, possible collaboration between the ROE and the electoral board wasruled out by the latter’s president, César Estrella Sadhala, who insisted that noexternal organisation would be allowed to interfere in the electoral process.

—and the EU warns of ahalt to aid

The European Union (EU) reacted strongly to rumours at the end of March thatunnamed senior government officials were plotting to disrupt the election. Theoutgoing EU representative, Martino Meloni, subsequently warned that the EUwould halt all financial aid to the Dominican Republic if the presidentialelection did not take place.

All candidates supportcloser relations with Haiti

The three leading presidential candidates all held meetings with the Haitianpresident, René Préval, during his visit to Santo Domingo in March (see Haiti).All three pledged to promote closer economic, social and cultural cooperationbetween the two countries.



Economic policy

The three parties proposesimilar approaches

A broad measure of agreement on economic policy has emerged from state-ments issued by the main presidential candidates. Consensus exists on thefollowing points:

• an annual inflation target of less than 10% in 1996;

• maintenance of the Central Bank’s autonomy;

• elimination of the president’s arbitrary power of expenditure;

• promotion of agricultural and industrial development; and

• poverty reduction.

However, party differences can be expected to appear on specific issues such asprivatisation of state enterprises.

The monetary boardintroduces new business

incentives—

At the end of January the Junta Monetaria (the state monetary board) an-nounced measures to encourage business and increase private-sector loan activ-ity. The measures included the following.

• A reduction in the legal reserve requirement for commercial banks from 25%to 20%.

• Lowering the Central Bank’s discount rate to commercial banks, and reduc-ing the interest rate for agricultural, industrial and small business loans from22% to 18.5%.

• Raising business loan guarantees above the previous ceiling of $500m.

• Authorising development and mortgage banks to provide savings andcurrent accounts, issue credit cards and engage in foreign exchange trans-actions. These operations were previously restricted to commercial banks.

—accompanied bysafeguards designed to

check inflation

In order to ensure that money supply growth, and thereby inflation, remainedunder control, the Junta Monetaria introduced the following counterbalancingmeasures.

• Special Central Bank bonds were issued to commercial banks in order toabsorb excess liquidity.

• A further restriction of public-sector credit. Overdraft facilities for govern-ment agencies at the Banco de Reservas (the government’s reserve bank) wereended. A ban was also imposed on lending to state agencies which wouldincrease their debt obligations over the levels of January 1.

• The introduction of a temporary private-sector credit freeze. Banks were in-structed to suspend new loans to the commercial sector (importers, communi-cations, insurance, property, personal and other financial services) for 120 days.This measure, which obliged companies to finance their requirements fromretained profits or overseas creditors, aimed to reduce the volume of pesos incirculation as loan repayments outstripped disbursements.



Fiscal surplus is confirmed Figures published by the IMF confirm the Central Bank’s projection (1st quarter1996, page 27) of a fiscal surplus in 1995. While revenue increased by 15.9% toPs24.9bn ($1.78bn), expenditure grew by only 4.4% to Ps23.2bn. The resultingPs1.7bn surplus compares favourably with a 1994 deficit of Ps690.6m. However,it was achieved at the expense of curtailing financial support to the ailing statesugar and electricity corporations. In the case of the sugar industry, productionfell sharply and the Dominican Republic was forced to import sugar as growersrefused to supply refiners until outstanding debts had been cleared. The sugarcorporation, Consejo Estatal de Azúcar (CEA), was forced to lay off almost13,000 workers when faced with bankruptcy. Similar problems were experiencedin electricity generation. Power shortages were common in 1995 as supplierscurtailed electricity provision in response to long delays in payment from thegovernment. This hurt manufacturing, which shrank by 0.7% last year accord-ing to preliminary Central Bank estimates. Government estimates of real GDPgrowth of 4.8% in 1995, compared with 4.3% in 1994, underline the economy’sgrowth potential once the power crisis is finally resolved. Complete resolutionof the energy crisis, however, may take some time. The incoming administrationwill have the problem of finding resources to refinance these industries prior toprivatisation, under the auspices of an increasingly autonomous Central Bankwhich appears determined to maintain a tight rein on public-sector credit.

Central government finance(Ps m)

1994 1995 % change

Total receipts 21,499.9 24,890.8 15.8 Revenue 21,482.3 24,890.8 15.9 Grants 17.6 0.0 n/a

Expenditure 22,190.5 23,170.5 4.4

Balance –690.6 1,720.3 n/aSource: IMF, International Financial Statistics.

The economy

Power cuts expected asSmith-Enron closes—

The country’s electricity supply, which improved in the first quarter, was ex-pected to worsen again from April 5 following Smith-Enron’s decision to shutdown its 185-mw plant in response to the government’s failure to pay outstand-ing liabilities of $4.2m. Smith-Enron, the largest private supplier to the stateelectricity company, Corporación Dominicana de Electricidad (CDE), had onlyincreased its generating capacity to 185 mw in the first quarter. Two otherprivate suppliers, Wartsila and Metaldom, have been contracted to install gener-ating plants, although the funding for these projects remains unclear. The main-tenance of tight fiscal policies in the short term may impede a large cashinjection to the CDE, which looks set to flounder until it is privatised. It loses anestimated Ps150m ($10.7m) per month, notwithstanding a Ps30m governmentsubsidy, and much of the power generated is lost in transmission throughramshackle wiring and illegal connections.

—and record low sugarproduction is forecast for

the CEA

Operations at the CEA, the state sugar council, started late in the currentseason, following an impasse in which sugar growers delayed delivery untiloutstanding debts were paid. This cost the government Ps100m. However, in



early April mills were still operating below target as growers continued towithhold half their supplies on the grounds that they were owed Ps381m fromthe previous season. Disruptions to production in 1995/96 look set to mirrorlast year’s troubles, which caused the CEA’s output to fall to only 224,448 tonscompared with 271,533 tons in 1993/94; the corporation will struggle to reachits production target of 275,000 tons this year.

Dole is reported to beleaving the country

Press reports in March alleged that a US fruit company, Dole, was consideringthe transfer of its Dominican pineapple business to Costa Rica or Honduras inan attempt to stem heavy losses. The company signed a 25-year contract withthe CEA in 1987 to rent 13,000 acres of land at $1.5m per year. However, theprospect of high returns soon faded, and Dole lost $30m in 1994-95 on itsinitial investment of $220m. Moreover, the company feels aggrieved at thetreatment it has received from the Dominican government. Instead of havingaccess to 13,000 acres for pineapple cultivation, the company reportedly re-ceived only 11,000 acres, of which only 6,500 were suitable for fruit planting.Dole was also unsuccessful in its application for duty-free status for machineryand parts imports.

Tourist arrivals areunaffected by the

February air crash—

Although firm tourism data for the first quarter of 1996 are not yet available,the February 6 crash of a chartered airliner carrying German tourists(1st quarter 1996, page 26) does not appear to have dampened tourist book-ings. The German ambassador to the Dominican Republic, Edmund Duckwitz,estimated that the number of German visitors would increase to 500,000 thisyear, up from 450,000 in 1995. Mr Duckwitz also exonerated the Dominicanauthorities of negligence. This view was supported by the official report on thedisaster, which blamed the Turkish pilots for failing to cancel the flight eventhough they were aware that the aeroplane had a faulty speed indicator.

—and tourism receiptsremained high in 1995

Preliminary estimates from the Ministry of Tourism indicate that tourism rev-enue rose to Ps1.58bn in 1995 compared with Ps1.47bn in 1994. The occu-pancy rate in the country’s 30,000 hotel rooms was 77%. The hotel sectoremployed 43,971 people in 1995, and created a further 109,927 jobs indirectly.Hotel capacity continues to grow steadily in line with rising tourist interest,with a further 2,674 rooms under construction.

Spanish bank to take overBancomercio

A Spanish bank, Banco Central Hispano (BCH), will be one of the first com-panies to take advantage of last year’s changes in the foreign investment code(4th quarter 1995, page 23). Under the new regime, foreign banks are permittedto hold a majority stake in Dominican financial institutions. BCH plans topurchase a 51% stake in Bancomercio, a leading Dominican bank which hasrecently experienced severe liquidity difficulties, for around $50m.

New international loansare agreed

The European Investment Bank (EIB) will lend $13.6m to the Asociación parael Desarrollo de Microempresas (Ademi), which promotes the development ofsmall business. Since 1983 Ademi has provided around $137m in loans to smallbusinesses. The government has also obtained a $3m grant from the Japanesegovernment for a refuse disposal project in Santo Domingo.



Foreign trade and payments

The government seeks tostrengthen agricultural

import protection—

No new trade or payments figures have emerged since the final quarter of 1995.The government has applied to the World Trade Organization (WTO) for per-mission to impose import tariffs ranging from 74% to 162% on several agricul-tural items including chicken, milk, onions, beans, maize, rice and sugar.Negotiations are taking place with the USA to secure support for the proposal,which has been criticised by importers, manufacturers and independent econ-omists as perpetuating inefficiency and high consumer prices.

—while liberalisingbilateral trade with the

USA

The government is seeking parliamentary approval for a bilateral trade agree-ment with the USA, which would seek to reduce barriers to free trade betweenthe two countries. A clause pledging Dominican adherence to internationallynegotiated trade-related intellectual property rights (TRIPS) is likely to be in-cluded in the agreement. This is designed to end the pirating of US films andvideo transmissions in the Dominican Republic.

New car sales suffer fromhigh tariffs

Vehicle importers have recently urged the government to reduce import dutieson new cars, observing that only 3,000 new vehicles were imported last year,compared with 90,000 second-hand automobiles.

Two US oil companies, Esso Standard Oil and Texaco, have called for an end tothe oil import monopoly granted to the Dominican Oil Refinery, which isjointly owned by the government and Shell.

Free zone garment exportsto the USA expand

Garment exports to the USA from Dominican free zones reached 34.8m dozenpieces in 1995, a 10.1% rise on the 31.6m dozen sold in 1994. However, thesales levels remained within the country’s quota of 37m dozen pieces. Close to36% of total garments exported were manufactured from material woven andcut in the USA.



Political structure: Haiti

Official name: Republic of Haiti

Form of government: cabinet headed by prime minister appointed by president, and approved by NationalAssembly, which comprises a Senate (27 members) and Chamber of Deputies (83 members)

Head of state: president, currently René Préval

Legal system: based on the Napoleonic code; courts of appeal and civil courts sit in the capital and in theprovincial capitals

Last national elections: presidential, December 17, 1995; legislative, June 25, 1995 (first round); August 13, 1995 (re-run of some ballots); September 17, 1995 (second round)

National government: dominated by the Organisation Politique Lavalas, which holds 66 of the 83 seats in the Chamber of Deputies

Main political organisations: Organisation Politique Lavalas; Front National pour le Changement et laDémocratie (FNCD); Mouvement pour l’instauration de la démocratie en Haïti (MIDH); Rassemblement desdémocrates nationaux progressistes (RDNP); Parti démocratique chrétien d’Haïti (PDCH); Mouvement pour laréconstruction nationale (MORN); Parti nationalist progressiste révolutionnaire (PANPRA); Comité national ducongrès des mouvements démocratiques (Konakom); Parti agricole et industriel national (PAIN); Le Frontrévolutionnaire armé du peuple Haïtien (FRAPH); Camp démocratique du l6 Décembre (K-16)

Main members of cabinetPresident René PrévalPrime minister Rony Smarth

Key ministers agriculture Gerald Mathurin commerce & industry Presnel Germain culture Raoul Peck defence & interior Jean Joseph Molière education Jacques Edouard Alexis environment Yves André Wainwright finance & economy Jean-Marie Chérestal foreign affairs & worship Fred Joseph Haitians living abroad Paul Dejean health Rudolphe Malebranche justice Jean-Erice Derice planning Piere Max Antoine public works, transport & communications Jacques Dorcéan social affairs Piere Denis Amedee women’s affairs Ginette Cherubin

Governor of the Banque Nationale de la République d’Haiti Claude Bonivert

26 Haiti


Economic structure: Haiti



GDPb G bn 16.5 17.3 22.4 24.6 41.7

Real GDP growthb % –1.3 –13.1 –3.4 –6.4 3.8

Consumer price inflationb (av) % 15.4 19.4 22.5 42.6 25.4

Population m 6.6 6.8 6.9 7.0 7.1

Exports fob $ m 202 76 82 84 150

Imports fob $ m 449 214 267 295 570

Current account $ m –56.1 7.9 –16.6 4.0 n/a

Reserves excl gold $ m 17.3 n/a n/a 30.9 n/a

Total external debt $ m 747.1 772.8 773.0 711.9 900

Debt-service ratio % 6.0 2.1 1.8 0.4 n/a

Exchange ratecd (av) G:$ 8.24 10.95 12.81 12.95 16.16

May 3, 1996 G16.18:$1

Origins of gross domestic product 1992 % of total Components of gross domestic product 1992 % of total

Agriculture 36.7 Consumption 103.1

Commerce 16.2 Gross domestic investment 4.6

Manufacturing 10.9 Exports of goods & services 9.6

Construction 4.5 Imports of goods & services –17.3

Total incl others 100.0 Total 100.0

Principal exports 1992a $ m Principal imports 1992a $ m

Manufactures 50.1 Food, beverages & tobacco 83.5

Coffee 9.1 Hydrocarbons 61.2

Manufactures 42.3

Machinery & transport equipment 18.2


USA 71.3 USA 50.2

EU 2.3 Netherlands Antilles 16.9

EU 14.1

a EIU estimates. b Fiscal years ending September 30. c Parallel market (average of buy and sell rates). d Year-end rate.

Haiti 27


Haiti

Outlook

Mr Préval will struggle tobalance domestic

concerns—

The new president, René Préval, faces difficulties at home and abroad as Haitiattempts to recover from years of authoritarian rule and economic mismanage-ment. Security remains the greatest domestic concern, with a strong likelihoodof violence from supporters of the former military regime. The government iswary of possible coup attempts, particularly since the newly trained policeforce has yet to establish its authority. The police have come under attackrecently, with three officers gunned down in early March. On the other hand,several civilian deaths at the hands of police officers have sparked fears that thenew national security department will mirror the brutality of its predecessor.The government has moved swiftly to assuage these fears by appointing acivilian as head of police. However, further training for the policy is required ifsuch incidents are to be avoided. The unexpected resignation of the director ofthe National Police Academy, Jean Chenet, who cited administrative problemsand poor working conditions as the reason for his departure, highlights thedifficulties facing the fledging police force. Demands on police officers willincrease after the planned withdrawal of UN troops in June. The depressed stateof the economy could lead to a sharp increase in violence and civil unrest thisyear, and threaten the country’s nascent democracy.

—strengtheninternational relations—

The Préval government has recognised that Haiti’s emergence as a democracyrequires an improvement in its international relations. An official visit to theDominican Republic in February resulted in pledges of improved cooperationbetween the two countries. The agreement of the Dominican Republic to dealwith the question of former coup leaders living in Santo Domingo was fol-lowed by the arrest of the former police chief of the military regime, MichelFrançois, which should help to ease fears of a comeback by member of thedictatorship. Mr Préval’s impassioned appeal to the US Congress for funds tofinance police training and judicial reform led to the release of $1m of pre-viously frozen aid (see The political scene).

—and overcome theimpasse with

international aid donors

However, the government’s privatisation agenda looks set to remain a stickingpoint with US and international donors. The latter are pressing the governmentto introduce wide-scale privatisation of state enterprises. With aid worth $100mblocked until a privatisation programme gets under way, the pressure on thegovernment is very strong. However, the divestment policy is fiercely opposedby many government supporters, who fear that its enactment will result inlarge-scale redundancies. The new government’s expressed determination toproceed with privatisation may result in a backlash from its own supporters.However, without international support there is little hope of the government

28 Haiti


achieving fiscal balance, restraining inflation or reactivating productive activity(as well as improving standards of health, nutrition, housing and education)during the forecast period.

Review

The political scene

The new governmentseeks firmer international

links

After his inauguration on February 7 the new president, René Préval, movedswiftly to strengthen the country’s external relations, visiting the DominicanRepublic, the USA and Canada; all three trips were judged successful. Mr Préval’svisit to the Dominican Republic, the first by a Haitian president since 1935,featured a six-hour conversation with the Dominican president, JoaquínBalaguer; observers described it as a turning point in Dominican-Haitianrelations. The two governments agreed to establish a joint commission to pro-mote cooperation on trade, immigration, development projects, drugs traffick-ing and money laundering. However, relations with Honduras may be strainedin future following the Central American country’s decision to grant asylum totwo former coup leaders: the former mayor of Port-au-Prince, Frank Romain,and the ex-police chief, Michel François.

Direct appeal to the USCongress triggers aid—

During a visit to Washington in March Mr Préval sought to gain the support ofUS officials and politicians following the gradual worsening in bilateral relationsin the closing stages of the Aristide administration. Anger among US congress-men over the perceived failure of the previous government to investigate severalpolitical killings caused the suspension of more than $10m in aid in late 1995.Furthermore, international donors refused to released $100m in economic aidbecause the previous administration stalled the country’s privatisation pro-gramme in November. While in the USA, Mr Préval obtained the release of over$1m in aid, previously blocked by the US Congress, after pleading the case forUS support for improved police training and judicial reform.

-14

-12

-10

-8

-6

-4

-2

0

2

4

6

1991 92 93 94 95

Haiti

Latin America

Gross domestic product % change on previous year

(a) Nominal exchange rates adjusted for changes in relativeconsumer prices.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.Sources: EIU; IMF, International Financial Statistics.

40

50

60

70

80

90

100

1990 91 92 93 94 95

Real exchange rates (a)1990=100

G:$G:$G:$G:$G:$G:$G:$G:$G:$G:$G:$G:$G:$G:$G:$G:$G:$G:$G:$

G:¥

G:$

G:¥G:¥

G:DMG:DMG:DM

G:$

G:¥

G:$

G:¥G:¥

G:DMG:DMG:DM

G:$

G:¥

G:$

G:¥

G:$

G:¥

G:$

G:¥

G:$

G:¥

G:$

G:¥

G:$

G:¥

G:$

G:¥

G:$

G:¥

G:$

G:¥

G:DM

Haiti 29


—but internationaldonors are unconvinced

by the privatisation policy

On the privatisation issue, however, the new leader failed to persuade donorsto release $100m in economic aid. Hindered by substantial opposition to large-scale divestment from within his own party, the Organisation Politique Lavalas(OPL), which is influenced by the previous president, Jean-Bertrand Aristide,Mr Préval could only promise a programme of partial privatisation, with thestate retaining a majority stake in the divested enterprises.

The UN mission isextended—

Just before the February 29 deadline the UN Security Council authorised afour-month extension of its peacekeeping mission to Haiti; however, its per-sonnel numbers have been reduced to 1,500. A request for 2,500 officers toserve for six months was vetoed by China, which reacted angrily to the pres-ence of Taiwan’s vice-president at Mr Préval’s inauguration. The total numberof foreign peacekeepers in Haiti is around 2,200, as the Canadian governmenthas provided 700 officers at its own expense.

—and a new primeminister—

After lengthy negotiations within the OPL, Congress finally approvedMr Préval’s nominee, Rony Smarth, as the new prime minister. Mr Smarth is anagronomist who had returned to Haiti after the demise of the Duvalier dictator-ship in 1986. The prolonged negotiations reflect creeping factionalism withinthe Lavalas movement, with Mr Aristide reluctant to relinquish political con-trol to Mr Préval. Mr Aristide, who reluctantly agreed to endorse Mr Préval’spresidential candidacy last year, supported the nomination of the previousprime minister, Claudette Werleigh. The chairman of the governing Lavalascoalition, Gérard Pierre-Charles, also presented himself as a prime ministerialcandidate.

—and cabinet areappointed—

Four ministers from the previous government retained their portfolios in thenew cabinet sworn in on March 6, as the new government decided to retain ameasure of continuity. However, the ministries of information and publicservice were abolished.

—together with a civilianpolice chief

A civilian, Pierre Denizé, was appointed chief of police on March 5, breaking alongstanding tradition whereby the police force was headed by an army officer.Mr Denizé’s appointment may be an initial step towards separating nationalsecurity and police powers. Their alliance was a key element in the coup success,while the former army chief, General Raoul Cédras, and the ex-police chief,Michel François, jointly collaborated to delay the return of Mr Aristide followinghis forced departure in September 1991. However, there are concerns that thenew police force, retrained by UN and US forces, might follow in the footstepsof its predecessor. There were new incidents of violence in late February andearly March in which several people were killed in a Port-au-Prince slum bypolice searching for members of a gang which had attacked a police station. TheTruth and Justice Commission, which submitted a report on crimes committedduring the three years of military rule between October 1991 and October 1994,urged an overhaul of the judicial system to regain public confidence in the ruleof law.

30 Haiti


Economic policy

The president aims ateconomic revitalisation—

The president, René Préval, used his inaugural speech to outline his govern-ment’s objectives for the next five years. These included:

• maintaining the economic recovery (last year the economy experiencedpositive growth for the first time since 1988);

• lowering unemployment from its current rate of 80%;

• reducing the government’s dependency on aid inflows (a new income taxhas been introduced to boost domestic financing of fiscal expenditure);

• curtailing inflation;

• fostering agrarian reform and rural development;

• developing tourism cooperation with the Dominican Republic;

• promotion of exports and small enterprises; and

• strengthening democratic institutions.

Mr Préval also admitted that Haiti was on the brink of bankruptcy as a result ofcorrupt public officials and low tax returns; he appealed for an end to publicfraud and asked taxpayers to fulfil their obligations.

—while the primeminister announces

austerity measures—

The prime minister, Rony Smarth, warned that austerity measures would beintroduced to depress inflationary pressures, rebuild domestic business confi-dence and attract foreign investment. To mitigate the social effects of thesepolicies, the administration plans to maintain subsidies for certain basic foodproducts.

—and a new approach toprivatisation is outlined

The divestment of state assets has become the most sensitive issue in economicpolicy. International donors continue to insist that the Haitian administrationcommits itself to an extensive privatisation programme as a pre-condition forthe release of a $100m aid package. However, the original proposal of theAristide government proved deeply unpopular with the government’s ownsupporters, and led to the resignation of the then prime minister, SmarckMichel. The subsequent opposition of Jean-Bertrand Aristide to the programmeled to its suspension in November, whereupon several international agenciesfroze their aid. The new privatisation programme put forward by the Prévalgovernment attempts to balance the opposing pressures from internationaldonors and government supporters. Under this programme, outlined in March,the electricity and telephone enterprises and the flour and cement factorieshave been earmarked for privatisation. However, the state will retain a majoritystake and will seek to avoid large-scale redundancies. Other forms of privatis-ation, such as management contracts with private companies or leasing ar-rangements, are being studied. Despite its good intentions, the newgovernment has yet to convince US and multilateral agencies of its commit-ment to divestment (see The political scene). It plans to present a revisedprogramme to international institutions in June.

Haiti 31


The economy

Aid inflows induce areturn to positive growth

The Haitian economy ceased to contract in 1995, with positive GDP growth of3.8% after seven years of shrinkage. The influx of aid which accompanied the1994 return of the deposed president, Jean-Bertrand Aristide, fuelled domesticconsumption, which grew by 45.6% in real terms. Although a breakdown ofthe consumption figures is not available, the EIU believes that governmentconsumption rose sharply last year to meet the urgent needs of reconstructionand poverty reduction. Economic expansion, however, fell below the 4.5%target agreed with the IMF as international donors froze aid in response to theAristide government’s suspension of the privatisation programme.

The fiscal deficit remainshigh—

Press reports indicate that the government hopes to keep the budget deficit toG610m ($37.7m) in fiscal year 1995/96, which ends in September. However, atthe end of March the deficit was G790m, with expenditure of G1,364m easilyoutstripping revenue of only G574m. The low fiscal income is partly due topoor tax collection: according to official sources, 80% of tax revenue is pro-vided by only 250 taxpayers.

—but inflation tumbles Annual inflation fell to 25.4% in 1995, a considerable improvement on the42.6% registered in 1994, as higher aid inflows eased supply-side constraints.The increased supply of foreign exchange was reflected by a sharp rise inreserves, which rose from $28.6m at end-September 1994 to $121.8m a yearlater.

Consumer price inflation(% change)

Monthly Annual

1993 – 22.6

1994 – 42.6

Dec 2.9 42.0

1995 25.41 Qtr 2.8 40.02 Qtr –0.6 25.33 Qtr 1.8 16.64 Qtr 2.2 16.8Source: IMF, International Financial Statistics.

Two assistanceagreements are signed

In February the Inter-American Development Bank (IDB) granted the Haitiangovernment a $3m loan to help it reorganise local government. The loan has amaturity of 40 years, with concessional interest rates of 1% for the first 10 yearsand 2% thereafter. The government also endorsed an agreement with Japan inMarch for a $5.1m grant to help finance a road improvement programme. Thisaccord is the fourth aid agreement approved by Japan.

32 Haiti


Political structure: Puerto Rico

Official name: Commonwealth of Puerto Rico

Form of government: US-style representative system

Head of state: elected governor, currently Rafael Pedro Rosselló

The executive: a governor is elected every four years and appoints, with the approval of the LegislativeAssembly, secretaries of departments to administer executive power

National legislature: bicameral Legislative Assembly; the Senate has 27 members, two for each of the eightdistricts, and 11 elected from the commonwealth as a whole; the House of Representatives has 51 members, onefor each of the 40 representative districts and 11 from the commonwealth as a whole

Legal system: US-style court system operating within the commonwealth, with the island also operating as aUS district with justices appointed by the president of the USA

Last national election: November 3, 1992

Next election: November 1996

National government: the Partido Nuevo Progresista holds two-thirds of the seats in the Senate and theHouse of Representatives

Main political organisations: government—Partido Nuevo Progresista (PNP); opposition—Partido PopularDemocrático (PPD); Partido Independentista Puertorriqueño (PIP); extra-parliamentary opposition—FuerzasArmadas de Liberación Nacional (FALN); Ejército Popular Boricua (Macheteros)

Main members of the governmentGovernor Rafael Pedro RossellóSecretary of state Baltasar Corrada del Río

Secretaries of state agriculture Neftalí Soto commerce & economic development Luis Fortuno consumer affairs Jose Alicea education Miriam Rodríguez de López health Carmen Feliciano housing Carlos Vivoni justice Pedro Pierluisi labour & human resources César Almodóvar Marchani natural resources Pedro Gelabert recreation & sports Eric Labrador social services Carmen Rodríguez Rivera transportation & public works Carlos Pesquera Morales

Treasury Manuel Díaz Saldaño

Puerto Rico 33


Economic structure: Puerto Rico


Economic indicatorsa 1991 1992 1993 1994 1995b

GNP $ bn 22.65 23.50 24.80 26.55 28.52

Real GNP growth % 0.0 1.0 2.4 2.6 3.4

Consumer price inflation (av) % 5.2 2.1 2.8 3.8 3.9

Population m 3.55 3.58 3.61 3.64 3.66

Exports $ m 21,323 21,800 20,323 21,753 28,811

Imports $ m 15,905 14,825 15,829 16,700 n/a

Hotel occupancy % 71.6 68.9 71.6 72.4 72.0

Origins of gross domestic product 1992 % of total

Manufacturing 41.3

Government services 12.5

Finance, insurance & real estate 12.5

Commerce 12.1

Transport 7.0

Other services 10.4


Main destinations of exports 1994a % of total Main origins of imports 1993a % of total

US mainland & US Virgin Islands 87.6 US mainland & US Virgin Islands 67.1

Foreign countries 11.4 Foreign countries 32.9

a Fiscal years ending June 30. b EIU estimates.

34 Puerto Rico


Puerto Rico

Outlook

Medium-term uncertaintyover Section 936—

The outlook for Puerto Rico is obscured by two major areas of uncertainty. Thefirst concerns the future of Section 936, the island’s major investment incentive,which has already been reduced and is likely to be abolished in the mediumterm. The elimination of the tax break threatens to reduce the inflow of newmanufacturing investment, particularly from pharmaceuticals companies, tothe island.

—is exacerbated by therevival of the

independence debate—

The second issue relates to the island’s constitutional relationship with the USA,with which it currently has commonwealth status. This allows Puerto Ricansfreedom of access to, and residency rights in, the USA, but denies the islandersdirect representation in the US Congress. The US-Puerto Rico Political Status act,currently under consideration by the US Congress, proposes to address theindependence issue at a 1998 plebiscite. The result of that referendum would betested in two further plebiscites in the following ten years before a final decisionis made, but this would prolong into the next century uncertainty over PuertoRico’s territorial status. Until the debate is finally resolved, foreign investors arelikely to remain wary of investing in an island whose tax status could undergo asudden change: a victory for the independence vote would bring a sharp curtail-ment of tax incentives;, but a win for the statehood vote would expose multi-national companies with investments in Puerto Rico to higher US federal taxes.

—although short-termprospects look more

favourable

Quarterly fluctuations in US growth are mirrored in the Puerto Rican economy,particularly the external sector, since three-quarters of the island’s exports areshipped to the mainland. The recovery on the US mainland in the first quarterof 1996, with growth of around 2.8% following the slowdown in the lastquarter of 1995, will have boosted the demand for Puerto Rican products.However, the EIU projects that interest rates will soon rise in the USA toprevent the economy from overheating. This will restrict US growth to around2.1% in 1996. Lower growth on the mainland, added to uncertainty over theisland’s future constitutional status and the elimination of Section 936, willslow the Puerto Rican economy. While the EIU still expects the economy toexpand by 2.7% in fiscal year 1995/96, which ends in June, growth in 1996/97is expected to reach only 2%.

Puerto Rico 35


Review

Another attempt toresolve the country’s

political status—

Puerto Rico’s constitutional status has been a source of dispute for some years.Many on the island favour becoming the 51st state of the USA, while otherssupport full independence. Under its current commonwealth status, the islandhas certain privileges, including eligibility for US citizenship, protection underthe US constitution and substantial funding from the US federal budget. How-ever, Puerto Ricans, who only recently gained the right to vote in some federalelections, are unable to vote in US presidential elections, nor are they directlyrepresented in the US Congress. The island’s governor does not have the sameinfluence with the US administration as a mainland state governor. As a result,the influence of Puerto Ricans on decisions made by the US administration islimited.

—through a possibleplebiscite in 1998—

A 1993 plebiscite on three options (statehood, independence or the status quo)resulted in a narrow victory for the status quo, namely the commonwealthoption, which gained 48.4% of the vote. The statehood option was backed by46.2% of voters, with the full independence option favoured only by 5%. Thedecision temporarily ended the debate about the island’s status. A billintroduced into the US Congress in March, with bipartisan support, seeks toresurrect the issue and oblige Puerto Ricans to choose between statehood andfull self-government. Under the new legislation, a plebiscite on the two optionswould be held in 1998. The bill also stipulates that, prior to the referendum,the implications of each option need to be clearly outlined for voters. One ofthe criticisms of the 1993 vote was that it was initiated by Puerto Rico withoutany guarantee that the result would be acceptable to the US Congress. Inde-pendence, for example, would necessitate the drafting of a Puerto Rican consti-tution to replace that of the USA, and the withdrawal of US citizenshipprivileges from Puerto Ricans. Statehood would confer citizenship and votingrights in Congress, but would also subject businesses and individuals to USfederal taxes.

—and subsequentreferenda in the following

ten years—

The 1998 plebiscite would force the island’s voters to choose between twodistinct options. Their choice would then have to be confirmed in two sub-sequent plebiscites within a ten-year period before it became law. In the eventof a major shift in voter preferences during that period, the bill provides for theUS Congress to re-examine the island’s constitutional status.

—has heighteneduncertainty over the

island’s future—

It is unclear how Puerto Ricans would vote in the plebiscite. In 1993 concernthat Section 936, the island’s major tax break, would be eliminated understatehood, with a resultant negative effect on foreign investment, promptedthe majority vote for the status quo. Section 936 benefits have since beenreduced by the US Congress, and it is clear that even if the immediate abolitionof the tax break is averted in 1996, the US Congress will not allow Section 936to continue indefinitely. The attraction of full independence may depend onwhether the ease of access to the USA which is currently enjoyed by PuertoRicans would be retained. The prospects of increased entry restrictions mayprompt Puerto Ricans to opt for closer integration with the USA, rather than aseverance of the existing links.

36 Puerto Rico


—and may prove a furtherdeterrent to foreign

investment

There is growing concern among local entrepreneurs that speculation sur-rounding the independence issue will combine with the prevailing uncertaintyover Section 936 to deter investors. Having recognised the likelihood of aforthcoming downturn in manufacturing interest as multinational companiesrelocate to other tax havens, the business sector has begun to diversify intonon-traditional activities such as tourism. However, in the short term invest-ment in these ventures is unlikely to offset the expected decline in capitalspending by manufacturing enterprises. Several multinationals have closedtheir Puerto Rican operations in recent months. The concern is real: a sharpacceleration in the pace of closures would exacerbate any slowdown in the USeconomy, and could cause an economic downturn in Puerto Rico.

Federal funds for therapid transit system—

Commonwealth status allows the island to receive substantial sums from theUS federal budget without returning tax revenue to the mainland. The Clintonadministration made a request to Congress in March for funds to help financethe San Juan railway system, a 10-mile rail link between the city centre andsuburban areas. In addition, the Puerto Rican government plans to finance40% of the estimated $1.1bn project budget through the issue of bonds. Thesewere issued in March under the tutelage of the Puerto Rico Highway andTransportation Authority, in collaboration with a US investment bank, MerrillLynch. Unexpectedly high demand for the bonds persuaded Merill Lynch toreprice part of the issue. Debt-service costs will be covered by oil and dieseltaxes and by toll receipts.

—and other transfers roselast year—

During the US fiscal year 1994/95, which ended on September 30, 1995, trans-fers from the Clinton administration to the Puerto Rico government reached$7.1bn, an increase of 7.8% on the previous fiscal year. The flow of income wasnot all unilateral: Puerto Rico sent $3.87bn to the US government, mostly in theform of social security contributions, unemployment insurance premiums andMedicare subscriptions. The net transfer of $3.2bn from the federal governmentrepresented 19.8% of Puerto Rican fiscal expenditure in the island’s 1994/95fiscal year, which ended on June 30, 1995.

—but fiscal revenueremains uncertain after

tax cuts

The US budget impasse, which was only resolved in late March, reduced federaltransfers to Puerto Rico to 75% of their previous funding levels in late 1996 andearly 1997. The government is worried that it will suffer in any future cutbackin federal spending, due to the island’s lack of congressional representation.Federal grants are particularly important in the current fiscal year, followingthe administration’s decision to cut income tax rates last June. The marginaltax rate in the $17,000-30,000 income bracket has been lowered from 25% to18%, while the corresponding rate levied on salaries of $30,000-50,000 hasbeen reduced from 36% to 31%. Previous experience has shown that lowerrates encourage wider reporting of undeclared income. But a wider tax basemay not offset the reduction in fiscal income arising from reduced rates.

The governor predicts abudget surplus in the

present fiscal year—

The governor, Pedro Roselló, believes that fiscal revenue will not be undulyaffected by the tax reductions. The government has projected a $225m fiscalsurplus for 1995/96; this upbeat forecast assumes real GDP growth of 2.8%. Inview of the strong overall performance of the US economy last year, the EIU’s

Puerto Rico 37


forecast is only marginally lower, at 2.5%. The governor’s budget proposals forfiscal year 1996/97 are based on GDP growth of 2.7%; this seems overoptimis-tic, as growing uncertainty over Section 936 and the possible plebiscite in 1998will deter investment and generate significant capital flight.

—and raises spending onlaw enforcement in the

next

The 1997 budget projects a 2.7% increase to $16.6bn in overall spending, with a12% increase in health-care spending and an 11% rise in public safety expend-iture. Rising delinquency in recent years has made crime a major political issue;the government has employed the national guard and the FBI to police theworst areas, which has resulted in a sharp decline in serious crime in recentmonths.

Retail sales flat in 1995 The fluctuations in the US economy, which expanded strongly in the first andthird quarters of 1995 and slowed in the second and fourth, appeared to havean unsettling effect on retail sales. In cash terms, overall sales were up only0.8%, and many sectors saw sales actually decline. New car purchases fell by 6%in cash terms, albeit after a strong performance in 1994, while women’s cloth-ing stores saw an 18% decline. With annual inflation of 2-3%, the decline insales in real terms was even larger. However, several sectors did perform well:spending in restaurants and jewellery stores, and on automotive accessories,were up by over 10%.

The island seeksexemption from the Jones

Act

Three members of the House of Representatives tabled a proposal in March toexempt Puerto Rico from the Jones Act limiting intra-US shipping to US vessels.The legislation levies a substantial cost, possibly as high as $500m, on PuertoRican traders, who have to ship virtually all of their external cargo. However,the congressmen’s proposal is unlikely to make significant progress due to stiffopposition from parties interested in preserving the present legislation.

A fibre optic link with theDominican Republic

A international consortium plans to construct a fibre optic cable link capable ofhandling an initial 15,000 telephone calls simultaneously between Puerto Ricoand the Dominican Republic. The project involves the participation of the UStelecommunications giant, AT&T, Puerto Rico’s Telefonica Larga Distancia, andTricom and Cidetel of the Dominican Republic. The construction programmeshould begin in late 1996 or early 1997. There are plans to increase the link’shandling capability to 300,000 simultaneous calls, which should ensure suffi-cient capacity to meet demand for the next 20 years.

38 Puerto Rico


Appendix 1

Cuba’s major hard-currency trading partnersa

($ m; monthly averages)

Jan-Dec Jan-Dec Jan-Dec Jan-Dec 1992 1993 1994 1995

Imports from CubaCanadab 17.9 11.1 11.8 19.5 Finland 1.6 1.6 1.6 0.2c

France 3.7 3.1 3.7 5.5 Germany 2.3 1.8 2.5 3.0 Italy 4.2 2.6 4.1 4.4d

Japan 9.5 4.2 5.3 7.8 Mexico 9.6 1.0 1.0 1.0e

Netherlands 6.0 7.5 8.1 14.2 Portugal 2.2 2.9 4.0 2.0 Spain 7.0 5.3 6.5 7.1d

Switzerland 0.7 0.6 0.7 0.9 UK 1.9 1.0 1.4 1.1

Exports to CubaBelgium-Luxembourg 1.9 4.6 2.8 6.8 Canada 8.2 9.0 7.0 16.7 France 7.6 10.5 11.1 12.3 Germany 4.9 3.3 3.4 5.8 Italy 8.5 5.0 5.1 6.6d

Japan 1.5 1.5 2.0 1.6 Mexico 8.6 11.0 11.0 12.0e

Netherlands 3.7 4.5 4.4 6.2 New Zealand 2.0 0.4 0.7 1.3 Spain 16.7 15.8 24.1 29.6d

Switzerland 2.0 1.0 0.7 0.7 UK 4.1 1.8 3.4 2.5

a Exports fob; imports cif. b Imports fob. c January-September. d January-October. e January-November.

Statistical appendices 39


Appendix 2

Trade of east European countries with Cuba($ m)a

Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec 1987 1988 1989 1990 1991 1992 1993 1994

Exports to CubaFormer Soviet Union 5,901 6,135 6,087 n/a n/a 191b 103b 248b

Bulgaria 229 309 n/a n/a n/a n/a n/a n/a Czechoslovakia 134 93 113 76 11 6 n/a n/a Poland 36 25 20 6 n/a 6 3 2 Hungary 48 53 48 29 25 8 2 4c

Romania 155 198 149 66 1 5 5 9

Imports from CubaFormer Soviet Union 6,051 6,326 6,141 n/a n/a 632b 436b 300b

Bulgaria 291 206 n/a n/a n/a 23 28c 31c

Czechoslovakia 118 119 120 45 5 10 n/a n/a Poland 31 22 16 2 n/a 1 1 1 Hungary 21 19 11 3 n/a n/a n/a n/a Romania 99 119 138 61 2 5 6c 15

Note. Cuba no longer publishes up-to-date statistics. Annual figures will be found in the Country Profile.a Converted by commercial conversion factors which correspond, in general, to official exchange rates (mainly par values) established with theIMF. b Russia. c Estimate.

Appendix 3

Former Soviet Union trade with Cuba(Rb m)

Jan-Dec Jan-Dec1990 1991

Exports fob (incl re-exports)Raw food 256.0 56.0Food products 153.1 129.0Consumer products 136.7 6.0Forest products, cotton 148.0 20.7Petroleum & products 1,637.0 560.7Minerals, metals 250.0 183.8Chemicals, rubber 79.9 18.3Construction materials 18.7 6.7Machinery & transport equipment 1,263.4 474.9Total incl others Rb m 4,006.8 1,550.1 $ ma 7,211.7 2,827.1

Imports fobNickel 211.2 23.1Sugar 3,335.9 903.4Total incl others Rb m 3,657.5 1,003.0 $ ma 6,583.0 1,829.3

Note. Commodity totals are additions of items in the trade accounts and may be incomplete.a Official rate: end 1990 Rb0.556:$1; end 1991 Rb0.548:$1.

40 Statistical appendices


Appendix 4

Exports of sugar from Cuba(’000 tons)

Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Oct Jan-Oct1991 1992 1993 1994 1994 1995

Former Soviet Uniona 3,835 2,922a 1,854 1,014 1,014 722China 797 825 315 475 475 683Egypt 142 105 27 301 301 166Japan 412 187 75 118 118 155Canada 332 487 166 151 151 144Bulgaria 43 113 56 101 101 133Algeria 200 189 85 137 119 111Romania 15 20 29 90 90 96Morocco 0 15 109 226 226 88Syria 141 63 27 58 58 44Latvia n/a 11 17 24 24 44Kazakstan n/a 133 0 16 16 30Lebanon 16 10 22 14 14 29Tunisia 69 50 44 30 30 29Uruguay 0 7 0 16 16 15Finland 94 74 72 45 45 13North Korea 25 38 0 10 10 10South Korea 0 28 0 56 56 0Belarus n/a 17 25 40 40 0Malaysia 0 0 0 26 26 0Singapore n/a 0 0 23 23 0Zimbabwe 0 0 34 18 18 0Kyrgyz Republic 0 3 77 15 15 0Ukraine n/a 310 332 0 0 0Brazil 0 74 30 0 0 0Iran 0 44 30 0 0 0Total incl others 6,767 6,085 3,662 3,188 3,170 2,603

a Russian Federation from 1992.



Appendix 5

Quarterly indicators of economic activity in the Dominican Republic,Puerto Rico and Haiti

1993 1994 1995 1996

4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr

DOMINICAN REPUBLIC

Prices: Santo Domingo Monthly av

Consumer prices: 1990=100 171.6 175.1 180.8 185.1 192.5 200.8 202.9 205.3a n/a n/a

change year on year % 3.6 4.0 7.8 9.0 12.2 14.7 12.2 n/a n/a n/a

Money End-Qtr

M1, seasonally adj: Ps m 12,488 12,768 12,932 13,204 12,688 13,132 13,746 n/a n/a n/a

change year on year % 23.1 21.7 16.2 5.9 1.6 2.9 6.3 n/a n/a n/a

Foreign trade Qtrly totals

Exports fob $ m 114.7 123.2 130.6 150.0 162.0 174.2 231.5 196.6 162.3 n/a

Imports fob “ 522.9 524.3 529.0 662.3 623.0 564.3 643.9 671.6 708.2 n/a

Exchange holdings End-Qtr

Central Bank:

goldb $ m 5.1 5.2 5.2 5.2 5.2 5.1 5.2 5.2 5.2 5.4c

foreign exchange “ 637.1 481.7 339.8 177.0 248.4 261.5 313.0 284.3 365.0 367.7c

Commercial banks: assets ” 155.4 163.6 172.4 143.9 138.6 150.7 163.4 n/a n/a n/a

Exchange rate

Market rate Ps:$ 12.77 13.05 13.05 13.51 13.06 13.60 13.79 13.65 13.47 13.74c

PUERTO RICO

Industrial production Monthly av

Cement ’000 tons 109 107 123 120 115 111 120 n/a n/a n/a

Prices

Consumer prices: 1990=100 109.9 111.2 112.6 113.9 114.1 115.8 117.4 118.7 119.4d n/a

change year on year % n/a n/a 3.9 5.1 3.8 4.1 4.3 4.2 n/a n/a

HAITI

Pricese

Consumer prices: 1990=100 184 201 233 263 265 282 293 307 326 n/a

change year on year % 28.9 31.7 40.9 52.6 43.6 40.3 25.8 16.7 23.1 n/a

Money End-Qtr

M1, seasonally adj: G m 3,491 n/a n/a n/a 4,600 n/a n/a n/a n/a n/a

change year on year % 22.7 n/a n/a n/a 31.8 n/a n/a n/a n/a n/a

Foreign trade Qtrly totals

Exports fob G m 291.2 440.1 368.8 7.2 203.2 535.9 743.9 758.3 n/a n/a

Imports cif “ 674.0 1,204.2 913.6 854.5 2,193.0 2,483.4 2,693.5 2,749.9 n/a n/a

Exchange holdings End-Qtr

Foreign exchange $ m n/a n/a n/a 28.5 30.9 131.2 172.1 121.1 n/a n/a

Exchange ratef

Market rate G:$ 11.98 11.99 12.05 19.03 19.08 19.00 19.00 19.00 19.00 16.18

Note. Annual figures of most of the series shown above will be found in the Country Profile.a July only. b End-quarter holdings at quarter’s average of London daily price less 25%. c End-February. d October only. e Port-au-Prince.f Source FT.



Appendix 6

US trade with the Dominican Republic and Haiti($ ’000)

Dominican Republic HaitiJan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec

1992 1993 1994 1992 1993 1994

Exports fobFood & live animals 158,722 208,081 191,748 129,806 110,824 88,757 of which: cereals & products 91,031 116,046 85,334 95,897 79,516 59,527 animal feeding stuffs 36,947 52,119 50,301 46 124 174Tobacco & manufactures 56,047 49,911 49,805 0 357 773Petroleum & products 38,436 37,742 58,318 24 325 825Animal & vegetable oils & fats 21,100 14,545 26,732 6,252 4,731 14,190Chemicals 147,512 127,377 168,331 4,517 6,632 8,106Leather & manufactures 64,948 81,476 81,863 589 632 150Paper & manufactures 44,210 48,288 72,998 1,690 5,603 6,029Textile yarn, cloth & manufactures 136,208 120,681 147,191 4,879 7,703 3,929Non-metallic mineral manufactures 10,869 15,107 12,800 309 761 580Iron & steel 13,835 12,994 14,807 113 205 273Metal manufactures 45,229 48,369 39,946 338 976 1,794Machinery & transport equipment 412,161 443,326 667,647 3,459 14,125 32,573 of which: transport equipment 72,386 76,884 212,422 323 3,969 10,369Clothing 557,762 656,743 744,384 41,902 52,924 17,668Scientific instruments etc 92,718 117,206 115,916 440 373 698Sports equipment, toys etc 3,250 2,864 5,957 4,306 5,075 1,404Total incl others 2,062,919 2,290,533 2,726,393 213,050 219,149 208,054

Imports cifFruit, vegetables & products 57,213 50,508 49,377 199 7,658 4,294Sugar & products 115,357 118,902 136,904 0 0 0Coffee 19,477 18,035 44,902 0 139 0Cocoa 37,491 37,944 58,555 0 0 0Tobacco & manufactures 31,853 40,683 51,554 0 0 0Metal ores & scrap 4,247 2,875 3,653 0 243 389Chemicals 9,509 13,428 9,557 193 5,132 916Leather & manufactures 2,560 2,904 7,530 3,219 4,109 2,340Textile yarn, cloth & manufactures 15,257 22,242 23,718 7,160 7,698 4,017Ferro-alloys 53,485 31,791 47,332 0 0 0Machinery & transport equipment 178,055 204,564 241,182 6,629 8,201 3,724Clothing & footwear 1,460,690 1,703,849 1,929,259 69,599 101,551 33,657Sports equipment, toys etc 4,165 3,663 4,499 12,243 13,652 4,337Total incl others 2,452,307 2,757,531 3,187,783 110,671 161,839 62,338



Appendix 7

Trade with major Western economies($ m)

Dominican Republic Haiti Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec

1992 1993 1994 1995 1992 1993 1994 1995

Exporting countries fobUSA (fas) 2,099.7 2,349.8 2,798.8 3,016.6 209.2 228.5 204.5 550.8 UK 29.4 36.5 37.8 44.1 12.7 15.3 11.9 21.3 Germany 45.4 42.3 70.5 45.3a 10.6 9.6 12.7 21.6a

Importing countries cifUSA 2,452.8 2,757.8 3,184.5 3,511.1 110.8 161.8 62.3 137.8 UK 34.9 32.5 31.7 38.4 1.3 1.4 0.8 2.0 Germany 26.7 31.1 54.5 91.4a 7.4 4.5 5.7 7.6a

a January-October.



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Cuba Dominican Republic Haiti Puerto Rico · Cuba, Dominican Republic, Haiti, Puerto Rico 2nd quarter 1996 May 10, 1996 Cuba Political and economic structures Pages 3-4 Outlook: The