HAVANA, (Reuters) – Low commodity prices, a drought at home and Venezuela’s economic crisis have created a cash shortage for Cuba’s Communist government, restricting its ability to trade just as it could be taking advantage of an economic opening with the United States.
State companies have cut imports and are seeking longer payment terms from suppliers, diplomats and foreign business people say.
The cash crunch, combined with Cuba’s hesitancy to embrace a recent softening of the U.S. economic embargo, demonstrate some of the complications U.S. companies face in Cuba even though Wash-ington is chipping away at the sanctions.
The Caribbean island’s cash flow has been cut by low prices for nickel, one of its leading exports, as well as for oil.
Cuba receives oil on favorable terms from Venezuela and refines and resells some of it in a joint venture with its socialist ally. But prices for refined products are down in tandem with crude.
“There is no money,” said the foreign director of a manufacturing firm in a joint venture with Cuba. Like others interviewed for this story, the director wished to remain anonymous to avoid annoying the government.
Comments about the liquidity shortage are echoed by others doing business with Cuba even with tourism up 17 percent this year.
“Cuba is clearly feeling the squeeze,” said the commercial attache of one of the country’s top trading partners. “They are falling behind on some payments and asking suppliers for credit terms of 365 days or longer, compared with 90 days to 180 days.”
Economy Minister Marino Murillo, speaking to the National Assembly in July, said export revenue had been less than expected and “adjustments” would be made.
Identifying those adjustments is difficult as Cuba’s finances are opaque. It is not a member of any international lending organization and the local currency has no value abroad.
OIL
Cuba imports more than 60 percent of its food and more than 50 percent of its oil, but the benefits from lower international commodity prices have been offset by the need for more imports due to the worst drought in more than a century.
