September 26, 2014 / 8:04 PM / 5 years ago

Cuban cabinet change aims to boost flagging economy

HAVANA (Reuters) - With Cuba’s economy flagging, President Raul Castro has turned to his most trusted economic adviser, Marino Murillo, granting him more authority to carry out ambitious reforms to the socialist economy.

Cuba's Economy Minister Marino Murillo Jorge addresses the audience during the National Assembly in Havana December 18, 2010. REUTERS/Enrique De La Osa

Castro on Thursday added the title of economy minister to Murillo’s brief.

Murillo, 53, was already one of Cuba’s vice presidents, part of the powerful 14-member Political Bureau of the ruling Communist Party, and chief of the commission charged with carrying out Cuba’s market-style economic reforms.

The existing minister, Adel Yzquierdo, 69, was demoted to vice minister, returning both men to positions they held together previously. Yzquierdo also retains his position on the politburo.

The official announcement said it was “necessary to take the process of modernizing the economy and planning to a higher level.” It also referred to the need to “harmonize and integrate” the reform process and the economy.

The dual challenges of restructuring the economy and nurturing its growth now fall squarely on Murillo, the architect and chief advocate of Raul Castro’s economic overhaul.

Since taking over for his ailing brother Fidel in 2008, Raul Castro has turned much of state-controlled agriculture over to cooperatives, reduced the state workforce and allowed self-employed contractors to operate small businesses.

In 2011, the Communist Party detailed 300 reforms to be implemented by 2016. Some 250 have been instituted, but economists say progress has been too slow and shallow, and Cuba’s economy has lagged.

Cuba reported growth of 0.6 percent in the first half and revised down its full-year growth forecast to 1.4 percent from 2.2 percent.

“Whether you want more reforms or less, economic growth is imperative right now. The reforms cannot really progress unless the economy grows much faster,” said Paolo Spadoni, a political science professor at Georgia Regents University, Augusta and author of this year’s book “Cuba’s Socialist Economy Today.”

Notably, Cuba recently reported record imports of $14.7 billion in 2013 at a time when officials have placed urgency on replacing imports with local production.

Murillo also takes on his new role with some of the most complicated reforms still pending.

“Murillo has designed the changes well. What’s left is the implementation,” said Pavel Vidal, a Cuban economist. “He is the one who can most efficiently maneuver this financial transition.”

Two major initiatives this year to attract foreign investment have yet to result in a foreign company signing a contract with Cuba. The island nation still must unify its dual-currency system, which features a local Cuban peso and a separate “convertible” Cuban peso equal to the U.S. dollar.

Also pending is a restructuring of its largest state industries such as sugar, manufacturing and tourism. Those are huge tasks for a communist government that has often proven resistant to change.

“This could mean there is an understanding that there is a need to increase the party’s control over the bureaucracy,” said Pedro Campos, a political analyst and retired Cuban diplomat. “He (Murillo) has said it is necessary to unleash the productive forces ... and he knows that the solution is in the market.”

Reporting by Daniel Trotta; editing by Andrew Hay

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