Last week, I talked a little bit about how Cuba was heavily dependent upon free Venezuelan oil and how the state was unable to succeed without a patron giving them money and oil. The effects of Venezuela’s collapse are now beginning to affect Cuba’s wider economy as well:
Cuba’s two-year-old financial crisis worsened during the first half of this year, and the country is having difficulty obtaining trade credits due to late payments to suppliers, according to Cuban Economy Minister Ricardo Cabrisas.
In a report to a closed door session of the National Assembly on Friday, which was broadcast by state-run television on Monday evening, Cabrisas said export revenues through June were short of expectations by $400 million.
Cabrisas said imports in 2017 would decline again and be $1.5 billion less than planned “due to difficulties in using credits, limits assigning liquidity and debts on expired letters of credit that have not been paid.”
A cash crunch and lower oil supplies from political ally Venezuela forced the Caribbean island to slash imports and reduce the use of fuel and electricity last year, helping tip its centrally planned economy into recession for the first time in nearly a quarter century.
However, Cabrisas said if last year 85 percent of imports were financed through commercial credits, through May the country had managed to obtain similar financing for just 40.8 percent as suppliers balked at piling up more debt.
That means the cash-short and import-dependent country must seek more government debt for supplies.
This is something to keep an eye on, because if things deteriorate enough on the island, we might be facing yet another refugee crisis.