Government's Fiscal Woes Ongoing

Cuba's fiscal position remains extremely weak, despite a significant uptick in revenues reported for 2010. With the private sector reform failing to yet take hold the government will find it increasingly difficult to cut expenditure, while tax revenues will increase only incrementally. Moreover, while the sale of state assets has supported the fiscal accounts in recent years this will become an increasingly untenable policy. We forecast a primary deficit of 7.6% of GDP in 2011 from an estimated 3.6% in 2010.

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