Firms Steps Taken in the Updating of Cuba's Economic Model

Republic of Cuba Vice President of the State Council of Ministers Marino Murillo Jorge. He delivered a report in December 2012 on the economic reforms being implemented in Cuba., a photo by Pan-African News Wire File Photos on Flickr.

Havana. December 18, 2012

Firm steps taken in the updating of Cuba’s economic model

• Council of Ministers Vice President Marino Murillo Jorge, head of the Policy Guidelines Implementation Permanent Commission, reports to National Assembly

O. Fonticoba Gener
Granma International

DURING the last period between sessions of the Cuban Parliament, the process of implementation of Policy Guidelines approved by the 6th Party Congress has progressed at a satisfactory pace, with new measures implemented to update the country’s socioeconomic model and others, already in place, being perfected.

This was the essence of the report presented by Council of Ministers Vice President Marino Murillo Jorge, head of the Policy Guidelines Implementation Permanent Commission, during the final plenary session of the 7th Legislature.

In a summary of progress made in the implementation process, he said, "The tasks which the Commission, national bodies and entities, local governments and enterprises must complete in 2013 and 2014 will be the most complex, those of greatest importance and impact on the updating of our economic model and on society as a whole."

Given their nature and scope, he said, these tasks must be studied carefully, in order to adopt the best decisions for the country, with the coherence required.

WORK UNDERWAY

Murillo reported that the drafting of the theoretical conception of Cuba’s economic model is well underway. This document will guide the work of all bodies involved in the nation’s development.

He said that also advancing is the establishment of fundamentals for the country’s long-term Economic and Social Development Program, which include the definition of indicators to be used to evaluate the model’s performance and, above all, to precisely determine goals to be met.

Murillo indicated that a timeline is being prepared for the implementation of macro-economic policies, included among the most important are a new methodology to determine wholesale and retail prices; monetary policy measures to be adopted to control the circulation of money; and procedures for financial planning, as tools to better coordinate macro-economic policy, the Economic Plan and State Budget.

Murillo made special mention of the new Tax System Law No. 113, which will go into effect in January, and highlighted the fact that regulations were included, which is not the case with the current, soon to be replaced, law.

While the Tax System Law is the highest authority, establishing the principles and taxable bases, he said, the Regulations detail procedures and norms governing the law’s application, which can be changed within the parameters established, without having to propose changes to the general law.

Murillo reported that work is currently being done on the design of the first 230 non-agricultural cooperatives which will open the gradual, experimental process of establishing this new form of economic activity. The legal framework for non-agricultural cooperatives went into effect December 11.

MORE AUTONOMY FOR ENTERPRISES

According to Murillo Jorge, a number of experimental changes in the functioning of enterprises will begin January 1, directed at expanding autonomy and authority in the economic and financial management of enterprises.

This process is being undertaken to advance in the construction of a working model of the socialist state enterprise and to support macro-economic policies, among others approved.

The objectives of this process are the re-capitalization of enterprises; increased earnings to make possible the financing of increased wages for workers; the creation of a wholesale market and the reconciliation of costs which the Cuban economy can sustain with their value on the international market.

The policy to be followed in the implementation of these changes, he said, has been approved and work is underway on the legal framework.

The experiment will expand the context in which enterprises function and, on a small scale, allow for trying out needed changes. The process of full implementation will begin with the consolidated sugar group AzCuba, and that of the biotechnological and pharmaceutical industries, BioCubaFarma, as well as the state shrimp farming enterprise.

Murillo explained that the experiment will additionally include limited changes for other enterprises, selected because of their importance to the country’s economic development. These will, for example, allow for the sale of excess production available after state contracts have been fulfilled, at accorded prices.

OTHER STEPS FORWARD

As part of his report to deputies, Murillo Jorge addressed the approval process underway of a proposal to make state entities’ social objectives more flexible, with the goal of allowing such institutions to more fully develop their potential.

This proposal would allow for the adoption of measures such as the establishment of the principal social objective by the body or institution creating the entity, with no reference to the currency in which it will operate. Another option would be permitting the director of an enterprise or entity to make decisions about secondary activities, related to the social objective.

Murillo Jorge likewise emphasized the importance of studies being done on the development of linked production sequences, in an effort to increase productivity and contribute to a better structural balance within the economy. These efforts are directed toward the fulfillment of Guidelines No. 7, 89, 103, 129, 132, 136, 185, 217 and 219.

He also reported that work continues to facilitate self-employment. Among the measures are the inclusion of new activities (such as real estate agent, measurement instrument repairer and antique dealer), the renewed granting of licenses for activities previously suspended, as well as a new regulation which defines the scope of all types of approved work.

The policy which governs the awarding of subsidies to individuals for home construction, Murillo explained, has also been updated, with more financing available if the dwelling is to be built in a seismic zone; for coverage of transportation costs of building materials and for costs associated with technical documentation or for long-term leasing of land rights. New categories of persons eligible for subsidies were also established, including renters or persons living in rented rooms. Subsidies will also be available for the repair of leaks and plumbing problems.

IMPROVING GOVERNMENT ADMINISTRATION

The experience of Artemisa and Mayabeque provinces, involved in an innovative project to perfect their administrative systems and leadership bodies, was also discussed during the National Assembly plenary session.

Second in charge of the Permanent Commission, General Leonardo Andollo, emphasized the importance of Decree No. 301, which defines state functions to be assumed by national state administrative bodies and entities with respect to provincial authorities in the two provinces.

"This decree provides the legal framework allowing the experiment to operate on an institutional foundation in which the delegation of authority and attributes at the different levels are clearly defined."

"No antecedent to this document exists and it is an important foundation for the future, since today there is no such regulation which defines precisely and comprehensively, the procedures involved."

He explained that as part of the project, in Güines municipality, Mayabeque, an effort is being made to consolidate, in a single building, all administrative services the population requires. Plans include the creation of a single administration and shared logistical support, for example, in the area of data and telecommunications, while studies continue to guide improvement of the project.

Andollo reported that regulations for Government Information Councils and Technical Committees in the two provinces have been approved and that the process of integrating all higher education centers is underway there, as well as in the Isle of Youth.

One important accomplishment of the experimental project, he said, is that throughout the process thus far, there has been no administrative instability, significant when taking into consideration that administrative structures in each of the two provinces have been staffed with 26% of the original personnel and the principal indicators of development have been maintained at levels similar to those of other provinces.

Despite the progress made, Andollo indicated that difficulties persist. Among these are limitations on efforts to concentrate leadership bodies in the smallest number of locations possible and the insufficient availability of supplies needed by leadership bodies and service providers.