There are two kinds of people in any population: those who detest fiscal statistics; and those who are fascinated by them. This note is exclusively addressed to people of the second kind.
Every time you look at a new release of budget numbers by the Cuba’s National Statistical Office (Oficina Nacional de Estadística e Información) you have to remember to hold on to your seat, because almost every time there is a surprise. The latest installment is no exception. It includes data from 2008 through 2013, which are reproduced below in tables 1a and 1b together with a reconciliation of the new and old presentations. If you see spots, the following narrative might help.
There are good news and bad news in the new presentation.
- The good news is that capital expenditure is now broken into several categories: “material” investment, working capital (a rapidly growing component in recent years), capital transfers, and purchases of fixed assets (a small amount). The new presentation also distinguishes between “budgeted” and “unbudgeted” capital expenditure, which I find only moderately useful.
- Another helpful innovation is the presentation, in addition to the overall fiscal balance, of a current account balance. This balance has been in surplus ever since the recovery from the post-Soviet crisis in the mid-1990s, but it turned into a deficit during the financial crisis of 2008-09 before improving substantially over the next several years. This is an important concept because it represents government saving, i.e., the change in the net worth of the government. The net investment balance (gross capital formation minus capital income) is also shown for the first time.
- Another novelty is the appearance of a new, unexplained and mysterious item labeled “extraordinary revenue and donations” (ingresos extraordinarios y donaciones) which adds 2 1/2 billion dollars to revenue in 2013. What is it? Your guess is as good as mine. One day, hopefully, the National Statistical Agency (or the Ministry of Finance) will issue an explanatory commentary on its statistical releases, as is done in many countries, thus saving the reader’s time and avoiding confusion.
- The bad news, and they are very bad indeed for the analyst of the Cuban economy, refers to what was called in the old presentation “transfers to the enterprise and cooperative sector” (transferencias al sector empresarial y cooperativo). The total is still provided under the label of “unbudgeted activities” (actividades no presupuestadas), but the three subcomponents of this item (subsidies for losses, for price differences, and other subsidies) have been suppressed. Elsewhere I had used data on subsidies for enterprise losses to estimate disguised unemployment, and data for “other” subsidies to proxy for the pass-through of the de facto Venezuelan oil subsidy to domestic enterprises. Now it is impossible to update these estimates.
- Another change to the revenue numbers for 2012 is the addition of $1092 billion to the category of “other non-tax revenue” (and to total revenue as well to bring it in line with its new definition). This category of “other non-tax revenue” is known to include payments received from Venezuela for the services provided by Cuban doctors, teachers, military personnel and other professionals as a quid pro quo for oil shipments.
- Other differences between the new and old presentations for 2012 involve re-classification of various capital expenditures. (i) $220 billon previously included in “productive activities” are now classified in a new category of “entrepreneurial services” which includes real estate activities; (ii) $488 billion previously included in defense are reclassified under public administration; and (iii) the old category of “housing and commercial services” is eliminated and $1,306 billion are re-classified as “other activities”.
I look forward to the numbers for 2014.