Cuba says economy up 2.7 percent in 2011

Fri Dec 2, 2011 11:07am EST

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* Economic growth just short of forecast

* Trade surplus seen for third consecutive year

* Government adopts measures to boost food output

HAVANA, Dec 2 (Reuters) - Cuba's economy will end the year up 2.7 percent, state media reported on Friday, an improvement over the 2.1 percent increase registered in 2010 but a bit less than the 2.9 percent forecast by the government.

Granma, the Communist party newspaper, blamed investment-related construction problems for the less than expected performance. It cited a recently concluded meeting of the Council of Ministers which adopted economic plans and a budget for 2012, without providing further details.

The newspaper said budget deficit reduction would also fall short of plans this year, due mainly to lower than expected revenue from sales taxes, indicating internal trade did not perform as anticipated.

Cuban President Raul Castro has been leading an effort to reform the communist-run country's Soviet-style economy as it struggles with heavy debt and stagnation.

Castro, since taking over for his ailing brother Fidel in 2008, has drastically cut imports while promoting domestic production and exports.

Cuban Foreign Trade Minister Rodrigo Malmierca said a month ago that trade was up 27 percent through September, compared with the same period in 2010, and on track toward a third consecutive surplus.

Reserves at the Bank for International Settlements stood at $5.649 billion in June, double what they were three years ago.

Granma reported on Friday that the government meeting concluded that efforts to improve domestic food production, through a series of reforms, had not gone far enough. Combined with higher international prices, that was undermining efforts to cut imports that cover 60 percent to 70 percent of domestic consumption.

Granma said the government meeting, chaired by Castro, adopted "a group of measures to eliminate immediately problems affecting Basic Units of Cooperative Production," a form of farming cooperatives established on state-owned lands.

The paper said measures were also approved modifying a land-lease program, which grants small plots of land to new farmers for 10 years, in order "to encourage the incorporation, permanence and stability of the labor force and guarantee the permanent settlements of the farmers' families."

Farmers have complained the leases are too short, the acreage is too small and that a ban on building permanent structures on the land works against increasing production.

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