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• CUBA CUBA Havana. December 23, 2010

• OUR AMERICA
• INTERNATIONAL
• CULTURE
• SPORTS Economic results of 2010 and
• MORE
INFORMATION
proposed plan for 2011
• Speech by Marino Murillo, vice president of the Council of Ministers
and minister of economy and planning
COMMUNICATE
(Typescript version – Council of State)
WITH THE
FIVE HEROES
Marino Murillo.- The deputies have been provided with a report,
which they have had for several days, containing an estimate of the
• REFLECTIONS
OF FIDEL movement of the economy this year and the principal objectives of
- Clinton's lies the plan for the coming year.
GRAFHIC OPINION
These are more or less the issues that we are going to touch on this
morning: the economic indicators, commercial exchange as seen in
GI SPECIALS
the 2010 estimate; the internal financial balance; the performance of
• HASTA LA VICTORIA the balance of energy, investments and construction and the state
SIEMPRE
(available only budget.
in Spanish)
You have in the report the selected economic indicators that we are
going to discuss.
• FROM OUR MAILBAG
Now, in the course of the explanation, while we have been able to
avuelta@granmai.cip.cu
achieve the Gross Domestic Product growth in its structure as we
anticipated in the plan, that is not exactly matched by the
contribution of each of the entities in meeting that growth. Certain
entities which should have contributed more to the GDP within the
economy this year did not do so, and others experienced a growth.

I want to mention a concept that we will return to later. The

shortfalls in relation to the plan are to be found in the material
production sectors. Thus, if there is a shortfall in the productive
sector, particularly in entities linked to the primary sector of the
economy, that is where the material wealth is produced.

Exports. Exports are growing considerably, targets are being met,

they have grown by 41.5%. But the situation is that, even though
they have grown, they remain below the plan.

Here there is an element which is important to discuss and to be

aware of: that the performance of some of our export products in the

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world market was above that anticipated in the plan; however, their
physical production was not achieved, as in the case of nickel, which
we forecast at $14,400 per ton, with the average price of nickel
touching $20,000 per ton. What does that mean? That even when
the price was favorable in comparison to that anticipated in the
plan, by failing to meet the physical production we lost additional
income, and that should be known. That cost us $120 million.

There was another product that had an average price well above the
one we anticipated in the plan, which was the case of tons or pounds
of sugar, however you want to put it and, given a significant shortfall
in exportable sugar production, we were similarly unable to take
advantage of the situation of market prices being higher than those
that we planned. And, in the case of not meeting our sugar exports,
we lost income in the order of $60-65 million which we would have
seen if the physical production envisaged in the plan had been met.

And so, other things also happened.

I am saying this because it is important for 2011 to concentrate on

the export commitments of all the entities and the productive base.
It is not right that we were unable to take advantage by failing to
meet the physical production targets in the plan, especially when
international market prices are favorable.

Failing to meet physical production targets with a price growth in

the international market denotes a symptom of little foresight within
the economy in order to be prepared and be able to take advantage
of situations that occur at a given moment.

In our analyzes of the economic management , we lack analyses and

an integrated approach, and this is valid for all the entities involved
and for everybody associated with productive commitments, and
fundamentally, export ones. Because we can have much hard
currency administration, much renegotiation of debts; but if we do
not meet income targets, the possibilities of continuing
administering that are going to be steadily more limited.

I emphasize that this year we could have had higher income in the
context of exports, which we did not have due to productive
shortfalls; in any event, as I said, exports grew.

The foreign trade outcome is positive, because the relation between

export goods and import goods is negative. It is the export of
services that has made the results of the country’s foreign trade
positive.

Another important element is fulfilling the investment process.

At a specific moment, 12 months ago, we adjusted the investment

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plan, we cut close to $950 million of it halfway through the year,

because these were investments that were not the most important
ones at that moment and they were investments that were not
associated with the policy that had been defined; in other words, the
priority was for investments that would provide income in the short
term and which could be recouped from the output of the
investment itself.

But this year, while there were investments that did meet that
policy, which gave income in the short term and which paid the
debts and financing with money generated from the investment
itself; however, neither are we going to fulfill the investment plan at
an adequate level.

That demonstrates that discipline, organization and training in the

investment process are needed in all sectors of the economy, without
exception.

There is lot of improvisation in the investment plan and the

tendency is to want to incorporate into the plan investments that
have not been thoroughly prepared, and the tendency is to want to
incorporate into the plan investments that have not passed through
an integral analysis and the effect that this could have on an
inducted investment beside it, and this leads to the fact that we are
not going to fulfill the investment plan for this year.

It is true that some of them were not made, because external

funding was not available at a given moment. It is also the result of a
lack of integrality in the analysis, because if we do not have secure
funding why would we incorporate the investment into the plan,
because after you incorporate it into the plan, independently of
external financing, in passing you throw out the balances of the
economy, because you have to balance construction materials in
order to assign them to that construction. And afterwards, the
investment cannot operate because of lack of external financing,
partial or total, but the materials have already been assigned, and I
would like to see who checks every last bag of cement to ensure that
it isn’t used for purposes other than that of the investment that we
made.

In total contradiction to what should have happened, even in recent

months, August-September, when we had realized that the
investment plan wasn’t going to be met, what we had on top of the
table was pressure from the entities to incorporate more
investments into the plan, which could not be the case. And I am
also saying that the Ministry of the Economy in particular is
responsible for that, because that’s the Ministry that I head; because
the guiding agency for efficiency in the investment process is the
Ministry of the Economy, and we have lacked discipline and also an

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integral approach at the point of assessing the investment process;

but a lot of money is being lost and many opportunities by failing to
meet the country’s investment plan.

We have to get rid of the headstrong mindset that we have and

sometimes being gaily content to put any investment into the plan
without the analysis needed.

After explaining the way in which we have set up the investment

plan for the coming year – I’m going to refer to that as well, because
we have to criticize everyone and in particular ourselves for the little
rigor that the investment process currently has, and if we don’t look
at ourselves harshly, we’re never going to transform this panorama.
That is how it is.

Well, in the energy sector, the economy is improving its efficiency.

In terms of electrical energy consumption in the state sector the
anticipated figures have been maintained slightly below the levels
anticipated, but there is an over-consumption against the plan in the
residential sector; however, it should be said that, starting from a set
of savings measures and controls in the assignation plan for energy
providers, the economy is a little bit more efficient than we
anticipated in the plan and is more efficient than in the last period,
which does not mean to say that there aren’t a lot more savings
reserves in terms of energy providers in the country in general.

In the plan the mercantile circulation of goods and services was set
at 31.571 billion pesos, we have an estimate of 30.979 billion:
MINCIN (Ministry of Domestic Trade) 20,720 billion, and there is
going to be 20.5 billion pesos in the year. MINCIN is going to be left
with a deficit in the mercantile circulation plan – mercantile
circulation is retail sales in pesos – of approximately 220 million.

If there had been a little better organization in the first quarter of

the year in MINCIN sales and assured supplies from national
producers to MINCIN in that quarter, the year plan could have been
perfectly met, because they are selling 50-plus million pesos every
day, and given that the shortfall is 220 million, with six days more
than the year contains, they could have met the sales plan; but that’s
not possible, the year has the days that it has, and it ends on
December 31; it was the first quarter of this year that wasn’t good. In
any event, liquidity in the hands of the population.

What is liquidity? it is the money that people have; what happens is

that that money in the hands of the people; part of it is in the bank
and the other part is in people’s homes – that is so-called money in
circulation.

Part of the liquidity is also in savings accounts and that is a liquidity

held by the population, but one which puts less pressure on demand,

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because it is being kept. Then there is also the risk, given that those
accounts accrue interest, they grow over time; but the good news is
that liquidity in the hands of the population did not grow and
remains slightly below, that is synonymous with us having had a
stable internal financial balance for 18 months. Imbalance in
internal finances is not one of the disproportions that the economy
has today.

Well, in terms of the GDP, we had calculated that liquidity in the

hands of the population would be 43.2% of the GDP, and it is at
41.8%, exactly the same as it was in 2009.

Work productivity grew by 4.2% and the average wage grew by

4.4%.

In any event, the fact that one has neared 4.2% and the other 4.4% is
a good sign because, as we explained last year, we were carrying that
problem for a number of years without being able to solve it; and we
explained that even with the two adjustments we made to the plan,
in the year in which we adjusted the plan, we still couldn’t solve that
problem, and we explained that the plan itself still hadn’t solved it,
and now we are coming very close to a balance, and next year there
will be improvements in the budget plan that we are making. For
next year we are giving 1.95% – of course, that is also associated
with the process of reducing inflated rosters and labor availability,
because if employees leave the state sector and the economy grows,
clearly that’s going to improve that relation.

In global terms, that is a favorable result for the movement of the

economy in the year that is ending.

There is a group of global indicators which is improving and having

achieved 2.1% signifies quite a major effort, even given what I was
explaining in terms of shortcomings in certain sectors.

I said just now that, while the economy grew as anticipated, there
were specific entities which did not meet their growth targets. In the
case of agriculture, 12 areas of production failed to achieve the
productive levels anticipated for the year, particularly in agriculture:
meaning pork meat, eggs, rice for consumption, root vegetables,
fresh vegetables, beans, citrus fruits and lumber. This shortfall in 12
productive sectors resulted in additional imports of $63 million
above those anticipated. We had to rush to find a shipment of beans,
we had to import more rice. Here there was everything: here there
was a lack of water, one thing or another, but also there were many
organizational problems and a lot of indiscipline on the part of
producers.

These are the productions that have been most affected, here are the
data. The rice target was 327,000 tons and the estimate that we are

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giving is of 247,000 tons. That meant that with this volume of rice
produced we had to deliver 169,000 tons of rice to MINCIN to
distribute via the household ration system or for social
consumption, and the latest estimate we have is 81,000 tons, and
that shortfall had to be imported, and is part of the $63 million
figure that I already gave you.

It has to be said here with all honesty, that if we do not straighten

out efficiency in the investment process and we do not straighten
out efficiency in the primary sectors of the economy, we will not
meet the economic production targets for 2015. Those things are
determining factors in the movement of the economy: agriculture,
MINAZ (Ministry of the Sugar Industry), the food industry and
efficiency in the investment process. If these three things go badly,
the economy is not going to function well. And that is what those
entities are being called upon to do, they are going to play a
determining role in the movement of the economy.

In the case of the food industry there is a knock-on effect, that if we

are not capable of making it more efficient and producing what is
anticipated in the plan, then we will have to import $1.6 billion in
foodstuffs in the coming year: $200 million to meet the internal
hard currency market and $1.4 billion to meet what we buy and
distribute through the ration system, plus food for social
consumption. And there, there is a lack of organization, a lack of
precision and a lack of quality in contracting productions with the
productive base. And everything catches us on the hop: either there
is too much sweet potato or there is no sweet potato, either there are
no beans or there are beans.

And there is also a lack of foresight in the plan for providing the
resources to these entities so that they can produce in a stable way,
as they must do, and not at the point when we do not have a specific
product; in any event, given that we have to eat, we have to go out
and buy it. Orderliness in the process of the plan and on the part of
the Ministry of the Economy with the three entities associated with
food production is a determining factor in the economic results
which we want to have in the next few years.

In the case of milk, 10 million more liters than anticipated is going

to be produced; but there was also indiscipline in milk distribution
and consumption. In that way, the productive increase of the 10
million liters is not going to directly reflect in terms of replacing
dried milk, because we are going to spend more on imported dried
milk than anticipated in the plan. There were provinces out there
which even changed the distribution policy and those that were due
to receive 10 liters of milk per month, received 30 liters. Those are
the country’s policies and you have to consult before changing them.

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And likewise, even though there have been advances in fuel control,
there are entities which did not meet their levels of activity but went
over their fuel consumption allocations for the year; that happened
as well. In the case of agriculture that cost us 17,800 tons; there are
others as well, in a lesser quantity. But there has to be tight
discipline, because if there isn’t, we are not going to put the
economy in order. This is the time to support the objectives of the
plan and not set about inventing anything outside of the plan.

Failing to meet the sugar harvest also comes into play; that also cost
us a lot of money, with sugar prices being very favorable; there was a
shortfall of 195,000 tons.

The structure anticipated in freight transportation was not achieved.

This year we have to move 54-55 million tons and that freight
transportation had an envisaged structure: motor transport,
railroad, here as well as there, for specialized enterprises attached to
agencies, for the Ministry of Transport. And the structure we
envisaged in the plan was not achieved, and we have to be strictly
disciplined with the freight structure, because if you were supposed
to transport a sack by rail and then you loaded it onto a truck, where
does the difference in fuel come from; because the railroad is much
more efficient than motorized transport. The guiding institution and
the one responsible for freight structures being met is the Ministry
of Transport, and this issue also gives it a lot of work with the
entities.

Now what is happening is that they are telling us, "Well, the
Ministry of Transport was supposed to have transported x cargoes
for me and I had to do it myself." Well, you have to go there and say
to the Ministry of Transport, "the fuel allocated for that has to go
through here." But we have to strictly comply with the freight
structure.

And I will take advantage and say here that investments made in the
railroad system in the Ministry of Transport are being paid for with
fuel savings, and fuel savings are achieved by complying with the
freight structure. This year, we are going to move 54 million tons of
products with 222,000 tons, approximately, using diesel; and next
year we have to move 2 million more with 182,000 tons. If that
freight structure is not complied with and more fuel is wasted
transporting the same amount, where are the savings for paying
everything that we are doing on the railroads, the investments that
have been made?

I insist on the idea that the concepts, the numbers and the costs of
the plan have to be followed every day.

Internal financial balance. First, in order to have balance you have

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to have sales and, out of 20,720 million, MINCIN is making an

estimated 20,500 million, and that gives us an acceptable balance.
We have that situation controlled.

In the case of investments and construction, which I have already

talked about, what is most outstanding here is the failure to fulfill
the investment plan.

There is a shortfall of 22.4% in the component of construction and

assembly and this is associated – as I said – with the lack of an
integral assessment of the investment process and, on certain
occasions, the availability of foreign financing.

We had envisaged 32,000 homes and 32,748 are going to be

completed, but growth is being determined, which is also correct, by
homes completed by individual effort.

In relation to water balances, a little less water is going to be

consumed than the anticipated volume, but in many cases this
consumption has been associated with the drought.

For the 2011 plan we are incorporating water balance as a category

within the plan; and I am going to say something about that when
we discuss the plan for 2011.

In relation to the state budget – which you also have in the report –
a deficit of 2.466 million is anticipated, up 0.3% on that inscribed in
law for this year. In that context, what is approved in the budget is a
deficit of 3.5% and it’s going to 3.8%. That increase in the deficit is
fundamentally associated with shortfalls in income, because there
the reduction in expenditure was also lower than that anticipated.

On the next page, you can see the performance of budget income
and expenditure.

There we are announcing that the Comptroller General of the

Republic has audited the central budget and the budget in the
provinces. There has to be an ordering of the central budget,
including the accounting expression of the budget; but the tendency
is toward many shortcomings in the administration of budgets at all
levels, accounting indiscipline, diversions, appropriations, and there
has to be an ordering, from the central budget to the budget at all
levels and a superior administration of the budgets, because many
resources are also lost in this way and all of us who have to
administer the country’s resources have a responsibility in this.

Even so, we managed to decrease expenditure by more than one

billion pesos; but what nobody knows is how much could still be
saved in terms of the money diverted, waste and lack of control that
there is in everyone who has to manage a budget. This is an audit of

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processes – as has been said – which has ranged from the central
budget to the latest budgets, and we have received part of the report
and are currently awaiting the other, and it is true that there is a lot
of reserves and much disorder in the handling of budgets, which
could produce savings… (He is told something)

The president is saying that here is the larger source of income that
we could have if we did it well.

Raúl Castro.-…just by reducing waste or part of it.

Marino Murillo.-And we are also alerting on this issue of managing

budgets, which we will be discussing in the next few days, in terms
of the subject of the economic policy guidelines and the updating of
the economic model, and given the participation that work under
non-state formulas is going to have, if this is not well controlled in
terms of budgeting, very strange phenomena could occur.

And some little things that we have done have not been well fulfilled
and strict discipline will have to be applied to that.

There are other deficiencies.

The Ministry of Economy and Planning, with the plan's current

mechanisms, has not been able to comprehensively project the
financing costs for imports needed to meet production expectations
during the year and [insure] that the expenditure does not later
become one spent to import finished products. We can't have it that
today we don't have money available to import raw materials and
tomorrow, when the final product is needed, the money appears,
since the finished product, in a crisis situation, is much more
expensive to import.

Those of us in the Ministry have to be more demanding within the

investment process; sometimes, even when we make an adjustment
to the plan, the adjustment is insufficient. We dropped 1.2 or 1.4
billion from the investment plan and we still need to have more
difficult discussions with the entities in order to further reduce the
plan to an estimate that we already knew wasn't going to be met
because, additionally, as I said, when you leave the investment in the
plan, you leave the resources moving about in the economy and if
the investment isn't going to be executed, you need to pull the
resources allocated.

It's true that the way in which we receive income from abroad is not
linear; and there are periods of time during which the money doesn't
get here and later on, it piles up. We need to identify precisely,
ourselves and the bank, funds which are temporarily available,
because production can't wait for financing. It has its own rhythm
and when it's interrupted, the logistics become more complicated.

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For example, halfway through the year, the provisioning of raw

materials for the production of medications was interrupted and we
are still facing a shortfall in our central stocks of medicine and I can
guarantee you that, from the middle of the year 'til now, the
financing for both QUIMEFA and the Scientific Pole has been
available, but at this point we are still not meeting the plan for the
year. Since a bump in the road appeared and the provisioning cycle
was disrupted, we are still facing a deficit in the central stocks of
medications.

We need to find funds which are temporarily unencumbered, to

have them in place and available, so that production is continuous.
The same can be said for continuity from one year to the next,
because it's December 31st up until midnight but then January 1st is
upon us. If we don't prepare for the next year's first quarter during
the last part of the year, we lose three months of production.

This year, we managed to make these advance plans at the end of

November, the beginning of December; but we've seen that, this
coming year, we need to get started halfway through the year, so
that the contracting process is timely.

Shipment alone from China takes 45 days and producers request 60

to 90 days to complete orders, but the economy can't withstand this
disruption of the production cycle; this has happened and when it
happens, we don't meet our goals and we have to import finished
products.

This is truly a deficiency that the plan has not resolved, not in its
development, or in its actual execution. We have to work on this.
That's why, as I explained, three times this year, financing was
advanced.

So now, where are we? We are now at the point when the entities
receive their figures for the coming year and they are identifying
different parts of their business plan and what is expected is that, on
January 1, everyone should have their plan in hand and everyone
should know what they have to do and it's a good thing that the
deputies should know this.

There is not a single entity that can, in any way, justify an enterprise
in Cuba not having a plan in hand on January 1. This is what the
Council of Ministers agreed to. There can be no improvisations,
because if you don't have a plan on day one, what are you going to
do during the first period of the year? Where are the resources
coming from? Where are the funds coming from? What do you have
to produce, at what cost, how efficiently? What effect does your
production have on the next guy's? So that what happened to us one
day doesn't happen. We were checking some of MINCIN's sales and
MINCIN said, "We didn't meet the sales target because they didn't

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give me the beds." The bed people said, "We didn't produce the beds
because somebody else didn't give us the pipe." And the pipe people
said, "We didn't deliver the pipe because the raw material from
China didn't get here." We can't have it, it's a chain reaction. We
have to make sure it doesn't happen.

To summarize, in 2010, the organization of the economy's

functioning has improved, despite what has been said.

I believe it's important to talk about what remains to be done in

terms of organization and not exactly what we have done. Debt is
structured better; there is better control of hard currency income.
This organization which has been achieved at certain levels is,
however, not yet reflected within the system of enterprises and it
really has to get to that.

Now then, we're going to explain the main characteristics of what is

described in the 2011 plan.

The gains in food production are modest considering the high

volume of foodstuffs we will have to import this coming year. Even
next year's plan does not resolve the issue; despite the expected
increase in food production within the country, we are going to be
importing food worth approximately $1.6 billion. It's growing, but
we're still importing a great deal of food.

Let's look at rice. Next year, we will have to get 445,000 tons from
Vietnam, which have already been signed for, contracted; now of
these 445,000 tons, more or less, 50% must be paid for within 360
days and the rest within 540, but 445,000 tons of rice is going for
around $231 million.

Therefore, everything that can be done in terms of rice production in

Cuba, in an orderly fashion, not like we've been doing, with the
comprehensive approach required, not like we've been doing, could
save 200 and something million dollars every year. I'm saying, with
the comprehensive approach required because we water the rice, but
we lose 50% of what we apply and later we say we can't plant rice
because our water reserves are low and then later, the harvest is
completed and the milling machinery isn't there on time. There is a
lot of potential to increase rice production in Cuba, but the rice
program has not been comprehensive.

Let's look at the issue of investment. Some 50% of investments are

productive; 13% are in production infrastructure; 19.2 are social,
which includes 43,000 dwellings; there is a 10.6% portion devoted
to social infrastructure, of which 2.1% and 4.3% represent urban
development and water supply respectively. This means that, 63% of
the investment to be made by the country during the coming year is
focused on production and production infrastructure. This reflects

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the policy that investments generating hard currency income for the
country, and those which provide a rapid return, should be
prioritized within the investment process. As you can see, the
structure is favoring productive investments and, within the social
sphere, we will have to make do with what we have for a few years.

Now, another explanation about the investment process. Works in

progress are prioritized, representing 77% of the total. We need to
maintain continuity with those investments that as of December 31
are in progress and will continue into the next year without
interruption.

Well now, moving on to another issue. What new characteristics will

MINCIN's distribution of merchandise have this coming year? Those
which have already been seen this year, but will be ratified next year:
projected is the distribution for sale of agricultural supplies worth
493 million, that's work tools: machetes, axes, barbed wire,
everything associated with what is being demanded by those who
have received land in usufruct and for established campesinos as
well.

At this time, there is a program which we've called the Campesino

Program - we check this every month - the sources of financing are
clearly defined, just about all of this is produced by the steel
industry, SIME, and some of it by MINIL, the light industry, and
where the resources to produce all of this will come from has been
taken into consideration. MINCIN's responsibility to distribute
these products, and the network of agricultural sales outlets where
they will be sold, have been established.

Since the beginning of time, the general store has always existed in
rural areas, where people go to buy what they need and those
products need to be supplied. Ah, these products are not going to be
subsidized, they will be sold without any subsidy and we are
reviewing the prices now, too.

There are some products which have come out at a price that may be
a little high; during the first quarter of the coming year, given that
many of the general stores have a surplus of these products, we will
begin to make some decisions about the prices, if we have to lower
them, or raise others. What we have coordinated with ANAP - and
Lugo agrees - is first to assure the supply of the products, and then
later we can talk about the price; that the products are available in
the market, and if, at a given time, it is necessary, we may have to
lower the price of a certain product, we can do it. In principle,
however, we are talking about the whole of these products, when you
multiply the money produced, it doesn't allow for a subsidy,
although there may be some which create more income. Therefore,
what we are talking about is the average, not each product exactly.

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I've seen that a few products are a bit expensive; we are going to
review the structure of those prices.

In another area, MINCIN is also getting involved, with sales of

construction materials this year already reaching 1.52 billion pesos,
with no subsidy.

One group of products for building walls and dry goods are sold by
MINCIN, in national currency, without subsidies, with all the
instability we've seen, with all the instability! That the cement blocks
arrive, but not enough, all this we know; that there were places
where the blocks were produced and then confusion as to who was
to transport them and there they were and MINCIN saying, we don't
have any gas and someone else saying, its not my job. All of this is
perfectly delineated and reconciled with all the entities in the plan
and exactly where everyone's responsibility lies.

The other day, based on an article that came out in the

Trabajadores newspaper, we had a meeting with MINCIN and the
construction materials industry and we have this completely defined
for the coming year.

Now we are presenting a problem. The country has been finishing

some 32,000 dwellings a year, of these 32,000, there are
approximately 8,000 which are finished every year, for which the
population receives subsidized materials. And we are of the opinion
that this has to be changed. Because then, what's going to happen?
We are going to have a cement block sold unsubsidized by MINCIN
at five pesos and we're going to have one sold by Housing and the
government at around 48 cents and it’s the same block and right
there what is being set up is the Dale al que no te dio [song by Juan
Carlos Alfonso y su Dan Den] because the resources are going to find
their way from one place to another; those who have materials
assigned are never going to get them on time, and three or four
people are going to profit from that 40-something cent block, selling
it at five pesos, depositing the money and keeping the difference.

The idea we have is that this market should go to MINCIN's

distribution system, that it is the entity largely responsible for retail
sales and should sell them without subsidy. And if someone needs a
subsidy in order to buy materials, then let's subsidize people and not
cement blocks, so when we sell cement blocks, we do it for everyone,
for those who have and those who don't.

The numbers are, more or less, the following: of the 1.52 billion
pesos worth of construction materials to be sold, one billion is going
to the state budget, in terms of distribution tax and we have
calculated that of this one billion, 888 million has to be set aside, to
be given to low-income families who now receive subsidized
materials, so that they receive a monetary subsidy and the cement

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block is sold in the market, at the same price for all. This policy has
been approved and is in the process of implementation.

The 880 million will permit us to finish 5,000 or 6,000 homes and
some 19,000 renovations, which is what is done today for the
families who receive subsidized construction materials. There
should not be, therefore, any impact. The only change is that instead
of receiving a subsidized cement block, you are going to receive
financing, which will have to be approved by the Municipal
Administrative Council. So, if it's 1.52 billion and we're taking 888
million for this, that means, more or less, 50 cents for every peso in
sales is devoted to this end, that we are going to distribute this
proportionately through the provincial and municipal budgets. So
that the number of cases which can be addressed will depend on the
sales made within the territory and that the Administrative Councils
will have to manage their budgets, even with all the limitations and
all that we've talked about here. That's why we spoke so forcefully
about the kiosks this morning, because every time we go adding
different items [for sale], if this is not well organized from the
beginning, it can turn out badly. And it's not a bad idea, what was
bad was the implementation.

I'm saying this because delegates have already asked questions and
lots of people are asking what's going to happen to the hurricane
damaged dwellings that are half done. They are going to be
completed, what's happening is so irrational, that, today, the same
block costs 45 cents one place and five pesos someplace else, this
doesn't make the slightest sense, no sense whatsoever!

It is expected that the Administrative Councils, when they evaluate

people in need of help, so that they are able to finish their homes
with their own efforts, maybe, for Homer, the help has to be 100%,
but perhaps, for his neighbors, it's 50% because, "Look, you have a
family income which indicates you need help for 50% of the costs
you'll have to take on." He doesn't need a 100% subsidy, it's for 50%
and when we subsidize blocks, it's at 100%.

That is to say, that's the policy, we have to work hard and we're
implementing it.

Inspections of the dwellings have been done with MINCIN and it is a

test of what we've been saying as economists for 50 years now,
enough of subsidizing products, subsidize people, and it's a first that
we're going to do, as a very focused effort, in the sale of construction
materials; but it has to turn out well and it has to be controlled, and
it's more advanced than what others are doing.

The same goes for a group of people who one way or another won
themselves the right to build their home, they're building their own
home, they aren't working and they're paid their full wage. I visited

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one individual, not long ago, who was at home for five years. For
practically four years he was not given materials, and he was there
waiting for the materials and drawing his wage.

As for the issue of the municipal initiative and development, next

year, a 20-million fund is being created to support investments and
imports for local development. I won't take long with this, it's about,
and every province knows the amount it has. I believe Camagüey has
1.1 million. Yesterday we discussed it with the provincial leaders and
everybody knows. We are waiting for them to present their projects.

The difference between what we are going to do during the coming

year and what we do now, is that now they send us their projects, we
look over them here with the bank and it's reconciled later with the
provincial commercial banks. Now the allocation is going to be made
to the province and when the proposal arrives, it comes with the
bank's opinion and what we all have to do is approve it or not. I need
to forewarn that what should be proposed are productive projects so
that the returns generated remain in the local area, partially or
totally, as is approved for each project, which is the only thing that
will allow for sustainable development in the municipalities, in
accordance with the guideline we have there, that enterprises
subordinate to national entities contribute to municipal
development.

It's important that the [provincial and municipal] presidents work

on this and present us with projects as soon as possible. The plan is
projecting a fund of 20 million to try out this kind of activity, income
from which will later be incorporated into municipal budgets.

The state budget: for the coming year we are indicating a deficit of
3.8%. We would have liked to stay within 3.5%, but we couldn't do
it, although we are still reviewing it.

I thought it would be good for you to know that we are not only
working on this year's plan, but that work has been done on the
future prospects of the economy and these are economic models
which are run in order to go about achieving a more balanced
economy.

Compañero General of the Army, I have finished.

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