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Cuba Plans $100 Million Fund to Aid Worker-Run Businesses

July 24 (Bloomberg) -- Cuba’s communist government will set aside $100 million to help establish private cooperatives as President Raul Castro takes further steps to boost economic growth on the island.

Cooperatives with as many as five employees will be allowed to manage their own operations by the end of the year, a policy meant to loosen restrictions on basic services and increase productivity, Castro told the National Assembly yesterday. Agricultural cooperatives account for about half the 200 businesses selected, Marino Murillo, deputy chairman of the Council of Ministers, said.

“We selected a group of business organizations to run an experiment with sufficient autonomy and power,” Castro, 81, said, according to a transcript of the speech posted on the government website Cuba Debate. “This experience will lift the brake that exists on the development of productive forces.”

Since his 85-year-old brother Fidel started handing over power in 2006, Raul Castro has initiated measures to open the Caribbean island’s economy, including loosening of property laws and controls prohibiting private enterprise such as taxi and mobile phone companies.

More than 390,000 Cubans were self-employed at the end of June, up from almost 233,000 in 2010, when the government vowed to “redesign” the country’s economy and cut 500,000 state workers. Transportation and food services are the largest source of private employment, Murillo told lawmakers.

Abandoned Exploration

The latest moves may help soften the blow from Repsol SA’s decision earlier this year to abandon oil exploration off the island’s northern coast after a test well came up dry. Falling prices for nickel, Cuba’s biggest export, have also undermined growth.

Not all of Castro’s measures have aided entrepreneurs. Earlier this month, the government announced they would impose new taxes on imported goods in September, adding to the costs for businesses that rely on materials from abroad.

Cuba’s economy expanded 2.1 percent in the first half of the year, up from 1.9 percent in the same period of 2011, Castro said yesterday.

To contact the reporter on this story: Eric Sabo in Panama City at esabo1@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

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