This post includes material from the ASCE's Spring 2012 Newsletter: (1) two short analyzes from Luis Luis, and (2) the Preliminary conference program.
Cuban Bank International Assets Unexpectedly Decline
By Luis R. Luis
Figures made public on June 4 by the Bank for International Settlements (BIS) show a large unexpected decline in assets of Cuban banks on deposit with banks of 43 countries and financial centers that report to the BIS. Cuban bank assets reached $5649 million on September 2011, an increase of $368 million from September 2010, but unexpectedly fell to $4109 million by the end of December 2011, a 24% decline from a year earlier (Assets – blue line in graph).
Cuban Bank Assets and Liabilities in International Banks
Source: Bank for International Settlements
Such a massive drawdown of hard currency assets by the Central Bank and other Cuban banks is highly unusual. At the same time total lending by BIS banks to Cuba (Liabilities – red in graph) remained essentially unchanged at about $1.7 billion.
Some Relief for Cuba on Food Import Prices
By Luis Luis
The price of Cuban food imports peaked in the third quarter of 2011 but fell since that quarter by 5.8 percent as of April 2012, according to the ASCE Index of Cuban Food Import Prices. This is significant good news for the economy that suffers major constraints in its balance of payments and which depends on imports for the majority of its foodstuffs. During the same period the benchmark food price index of the IMF declined 2.5 percent. A 15 percent fall in the price of wheat was the most salient element in the decline, while soft prices of milk and other dairy products helped considerably. The price decline would have been even more significant but for continuing sturdy poultry prices, up some 6 percent since the Fall quarter of 2011. Rice, the largest food commodity import, had stable prices.
Sources: Constructed from IMF and BLS data.Note: IMF index is the index of food commodity market prices of the IMF
Futures markets for commodities suggest that the relief may not continue in the rest of the year. While the on-going slowdown in the European and US economies have affected the price of industrial commodities so far the impact on foodstuffs is muted. The only major Cuban import with declining price in the December 2012 futures contract is corn at a nearly 8 percent discount below the spot price. All other major contracts relevant to Cuban imports –rice, wheat, milk and coffee – are now trading at a premium over spot prices as gauged by December 2012 contracts. Wheat is at a nearly 7 percent premium while rice trades at 5.7 percent. The December 2013 wheat contract at the Chicago Mercantile Exchange is nearly 18 percent over the spot price implying continuing pressures on this key commodity for the next 18 months.
The precise use of this large and rapid withdrawal of assets, most of which are estimated to be deposited in European banking institutions, is not known. There are three major possibilities. One is the use of reserves to purchase imports of consumption and capital goods. Although official 2011 data has not been released by the government, higher foodstuff prices paid for in hard currencies contributed to a rising import bill. In addition the government probably increased foreign exchange allocations for capital good imports to Cuban government trading companies and other state corporations to stimulate investment including the newly established small proprietorships. Oil imports also rose considerably, but these are financed under special arrangements with Venezuela.
A second possibility is the use of cash to repay outstanding obligations to suppliers and companies operating in Cuba as well as some net amortization of official debt. Available corporate reports from Sherritt International and other large companies operating in Cuba do not show such payments but they could involve non-listed corporations. Amortization to some bilateral export finance agencies is also likely.
The third possibility is that Cuba is shifting assets from European area banks which are reported to the BIS to banks elsewhere. Non-BIS reporting banks include Latin American banks outside of Brazil, Chile, Panama and Mexico, banks in China outside Hong-Kong and most banks in the Middle East. A shift outside of the euro area would reflect perceptive financial management by the Cuban Central Bank given the on-going weakness of the euro and questions about the liquidity of some banks in Europe. It may also reflect a need to collateralize trade finance with demanding partners in Asia and Latin America. Another twist is the possibility that Cuba is diversifying some international assets into gold, although at this time this would be a speculative course of action.
Draft 6/11/2012ASSOCIATION FOR THE STUDY OF THE CUBAN ECONOMY (ASCE)TWENTY-SECOND ANNUAL MEETINGMiami, Florida, August 2-4, 2012PRELIMINARY CONFERENCE PROGRAM(subject to change)Thursday, August 2 –AM1. Current Economic and Social SituationChair: Rafael Romeu, ASCE PresidentOscar Espinosa Chepe, Independent Economist, CubaMarc Frank, Reuters News Agency, La HabanaOmar Everleny Pérez Villanueva, Centro de Estudios de la Economía Cubana (invited)Eusebio Mujal-León, Georgetown University2. Cuba and International Financial InstitutionsChair: Armando LindeRichard Feinberg, University of California, San Diego, “Reaching Out: Cuba’s New Economy and the International Response”Joaquín P. Pujol, “Cuba’s Membership Requirements in the IMF– Uncensored”Discussants: Lorenzo Pérez; Ernesto Hernández-Catá; Rolando CastañedaLUNCHThursday August 2 - PM (session 1)3. Financial and Macroeconomic IssuesChair: Carlos QuijanoErnesto Hernández-Catá, “The Growth of the Cuban Economy in the First Decade of the XXI Century”Julio Cerviño, Universidad Carlos III, Madrid, “Market Orientation and Business Performance in Cuban Firms: A Comparative Analysis of State-Owned Versus Joint Venture Cuban Firms”Luis R. Luis, “Cuba: External Cash Flow, Barter Trade and Potential Shocks”Pavel Vidal, Centro de Estudios de la Economía Cubana, “Monetary and Exchange Rate Reform in Cuba: Lessons from Vietnam” (invited)Discussants: Armando Linde; others TBA3. Social Media in Cuba: The New Public Sphere?Moderator: Clara Dominguez, Managing Editor, Latin America Division, Voice of AmericaPresenters:Ted Henken, Baruch CollegeAntonio Gayoso, The George Washington UniversityOthers TBAThursday August 2 –PM (session 2)4. AgricultureChair: Gary MaybardukTim Ashby and Stephen Kimmerling, “Trade and Agriculture”Raúl Fernández García, “Los retos que amenazan la agricultura”Bill Messina, University of Florida, “U.S. Food and Agricultural Exports to Cuba: Progress, Problems and Prospects”Armando Nova, Centro de Estudios de la Economía Cubana, “La agricultura cubana y el actual proceso de transformaciones económicas” (invited)Discussants: Antonio Gayoso, Mario González-Corzo5. Iglesia, Religión y Reformas en CubaModerator: Tomas Bilbao, Cuba Study GroupOrlando Márquez, editor de Palabra Nueva, revista de la Arquidiócesis de La Habana, “La Iglesia como puente de acercamiento” (invited)Javier Figueroa, Universidad de Puerto Rico, “Una aproximación histórica a las relaciones actuales entre la Iglesia Católica y el estado cubano”Teo A. Babún, Jr., Director Ejecutivo, ECHOcuba, “El crecimiento de la Iglesia Protestante y la libertad de religión”Comentaristas: Enrique Pumar, Lorenzo PérezFriday, August 3 – AM (session 1)6. The Cuban DiasporaChair: Carlos QuijanoManuel Jorge Cutillas, President, Chief Executive Officer and Chairman of the Board of Bacardi Limited, retired (invited);Guillermo Martinez, South Florida Sun-Sentinel, Co-Auhtor: Cubans: An Epic Journey, The Struggle of Exiles for Truth and FreedomLeonardo Rodriguez, Professor Emeritus of Business and Finance, Florida International University, Co-Auhtor: Cubans: An Epic Journey, The Struggle of Exiles for Truth and Freedom3. Property RightsChair: Raúl Valdes-FauliRolando Anillo, “Propiedad y migración”Antonio Zamora, “The Impact of Cuba’s New Real Estate Laws on the Island and the Diaspora”Larry Catá Backer, Pennsylvania State University, “Organizing Cuban Economic Enterprises in the Wake of the Lineamientos—Property Rights in Economic Organization Between Corporations, Cooperatives and Globalization”Daniel Buigas, Indiana University Law School,” Cuentapropistas after the Sixth Congress of the Cuban Communist Party: Analyzing and Evaluating Cuba’s Current Laws and Regulations” Discussant: José Gabilondo, Law School, FIUFriday AM (session 2)4. Student PapersChair: Enrique Pumar, The Catholic University of AmericaStudent participants to be announced5. Economic Reforms and Their Effects (I)Chair: Oscar EchevarríaRafael Romeu and Gabriel DiBella, IMF, “Fiscal and Structural Policies Twenty Years After Transition”Vegard Bye, Norwegian Institute of International Affairs, “The Political Economy of Cuban Transition: Political Impact of Economic Reforms”Rolando Castañeda, “Cuba 2012: The Likely End of Soft Reforms in Hard Times”Domingo Amuchástegui, “From Chaos to a Socialist Market Economy: A Contribution to the Understanding of Current Changes and Developments in Cuba”Discussants: Peter Brennan, U.S. Department of State; others TBAASCE LuncheonErnesto Betancourt Keynote LectureJorge Domínguez, Harvard UniversityFriday PM (session 3)3. Historical CubaChair: Jorge SanguinettyIlan Ehrlich, “The 1950 Midterm Elections: Cuba’s Last Democratic Poll”Jorge Luis Romeu, “To Hell in a Handbasket”Eric N. Baklanoff, University of Alabama, “Spanish Immigrants and Economic Development in the Cuban Republic, 1902-1959”Discussants: Jorge Sanguinetty, Roger Betancourt4. Política Migratoria en CubaModerador: Álvaro Botero, Relatoría sobre Derechos de los Migrantes, Comisión Interamericana de Derechos Humanos (CIDH), Organización de Estados Americanos (OEA).Panelistas: Juan Antonio Blanco, Cuban Research Institute, Florida International UniversityCarmen Díaz, University of MiamiHaroldo Dilla, Universidad de Santo DomingoWilfredo Allen, AttorneyFriday PM (session 4)5. Demography and Public HealthChair: Maria WerlauJavier Corrales and Christopher Morrison, Amherst College, “Are Cuban Women Voting with their Wombs? An Economic Examination of Cuba’s Low Fertility Rates”Gabriel DiBella and Rafael Romeu, IMF, “The Fiscal Sustainability of Aging Costs and Demographic Change in Cuba”Elaine Scheye, “"Why is Biotechnology a Crown Jewel and Yet Cubans Can’t get a Prescription Filled?"Rodolfo Stusser, “Cubans’ Access to Health and Other Living Standards: Perception vs. Reality”Discussants: Sergio Díaz-Briquets; others TBA6. International Economic Relations and OilChair: TBARolando Castañeda, “Venezuela: Economic Situation in 2012 and Its Immediate Prospects”Carlos A. Romero, Universidad Central de Venezuela, “Rentismo y petróleo entre Cuba y Venezuela”Roger Betancourt “Oil and Democracy in Cuba: Is Cuba Going toward Nigeria or toward Norway?”Discussants: Roberto Orro; Emilio Morales; others TBASaturday, August 4 – AM (session 1)3. Special Topics (I)Chair: TBAJoseph L. Scarpaci, West Liberty University, “Malling Havana”Michael J. Strauss, Centre d'Etudes Diplomatiques et Stratégiques, Paris, “Does Cuba Share Responsibility for Human Rights at Guantanamo Bay?”Dawn Gable, George Washington University, “Habana Eva: Art as Propaganda”Discussants: TBA4. Economic Measurement IssuesChair: TBALuis Locay, University of Miami, “Cuban Household Consumption: An Update”Bryan Roberts, “Food Consumption in Cuba, 1961-2010”Jorge Pérez-López, “Cuban Labor Market Statistics: Availability and Interpretation”Mario González-Corzo, Lehman College, “Measuring Cuba’s Agricultural Transformations: Preliminary Findings”Saturday, AM (session 2)5. Self-Employment, Cooperatives and Solidarity AssociationsChair: TBATed Henken, Baruch College, “Out of the Underground? Comparing Self-Employment Regulations in Cuba Under Fidel (1993-2006) and Raul (2006-2012)”Antonio Gayoso, “Las nuevas cooperativas en Cuba: Solución o Desidia”Julia Sagebien and Paolo Spadoni, “Can Non-State Enterprises be the Champions of a Social Economy in Cuba?”Discussants: Felipe Manteiga; others TBA6. Special Topics (II)Chair: TBAJorge Sanguinetty, “The Future of the City of Havana: An Economic Dimension”Armando Linde, “A Journey into the Mind of Raúl Castro”Juan Tomás Sánchez, “Where is Cuba Going? Perspectives from the Island”Discussants: TB