Enterprises in Cuba go bankrupt

The government decided to extinguish a group of 24 entities with negative financial balances, the majority belonging to the agricultural and livestock sector.

Almost all of the 24 enterprises extinguished due to several years of sustained losses belong to the Agriculture Ministry.

Foto: Archive IPS

After three years of sustained losses, a group of Cuban state-run enterprises finally went bankrupt and the government decided to extinguish them. The measure came up during the recent Parliament sessions but aroused little repercussion inside the country despite this being a novelty, at least as a public announcement; probably because it was already previewed in the document guiding the economic changes in Cuba.

Following the Economic and Social Policy Guidelines approved in 2011, the authorities decided to close down 24 state-run enterprises – the majority from the agricultural and livestock sector – out of 123 that concluded last year with negative balances in their work. The Economic Affairs Commission of the National Assembly reported to the rest of the MPs that 87 of these entities had registered almost 323 million pesos in losses despite their having planned profits.

 

Out of the total, 56 enterprises had those losses hanging over them for two or more years, commented MP Armando Utrera, vice chairman of the Economic Affairs Commission of Parliament. But the authorities gave the majority of these entities a chance. “Six of them have been authorised by the Financial Economic Commission to work with losses until 2016, while the recovery of 26 during this year has been previewed, based on actions planned by the authorities or changes in the financing system to be received by the State Budget,” Utrera said.

 

In one of the points that did attract attention in 2011, when the Congress of the Communist Party approved them…that alternative was established: “The state-run enterprises or cooperatives that show sustained financial losses in their balances, insufficient work capital, cannot honour with their assets the obligations contracted or obtain negative results in financial audits, will be submitted to a process of liquidation or will be able to be transformed into other forms of non-state work….”

 

The major part of the enterprises with reiterated losses for several years belongs to the Agriculture Ministry (MINAG): 73 per cent. In the agricultural and livestock sphere, moreover, there are 23 entities that will perish. However, the director of Accounting and Prices of MINAG, Alexis Rodríguez, explained that the extinction of the enterprises with sustained losses does not imply a decrease in the levels of activity, but rather a reorganisation of the resources for providing efficient services.

 

The MPs strongly criticised the agricultural entities for the reiterated problems in their business procedures and leadership, the undercapitalisation the sector has been suffering for years, the lack of scientific development programmes and investments, and the social consequences of these deficiencies.

The government has given greater autonomy to the enterprises to manage their profits, but has notified them of a more demanding position toward inefficiencies.

The government has given greater autonomy to the enterprises to manage their profits, but has notified them of a more demanding position toward inefficiencies.

 

The sugar agribusiness, under the umbrella of the Azcuba Business Group, is another sector with a strong presence in the losses, five enterprises, though the group’s leadership is planning their recovery this year through actions to adjust their economic and financial activity.

 

According to the report presented to Parliament, at the close of the first quarter of this year 65 enterprises had shown losses.

 

Since last year the business sector has been at the centre of part of the more complex measures of the process of transformations of the Cuban economy, including some directed at a more autonomous use of profits. But the government has warned that, on a par, it will adopt a more demanding position with the state-run entities, until now used to the help of the State Budget each time they got lost in the financial course. (2015)

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