Cuba has authorized government banks to offer credit to farmers and small business owners, a key step in a series of sweeping economic changes ushered in over the last six months, state-run media announced Wednesday.
The government has granted tens of thousands of business licenses to new entrepreneurs, and has also loosened restrictions in order to allow farmers to sell their products directly to consumers from roadside kiosks. One of the main challenges facing the new businesses is a lack of financing, making bank credits an important ingredient for success.
The program authorizes credits for purchasing farming equipment in authorized stores _ rather than on the black market. It also allows for "loans to persons authorized to operate private businesses to finance working capital and investment," according to an article in the Communist Party daily Granma.
The article said the measure was approved Friday at a meeting of the Council of Ministers, presided over by President Raul Castro. It gave no details on how credits can be obtained, or what interest rate or other rules the payouts will be subject to, or what the total amount of such loans will be.
Some economists have expressed doubts that cash-strapped Cuban banks will be able to handle the loans and have urged the state to reach out to foreign investors for capital.
While the article made no mention of such a move, many entrepreneurs are receiving foreign capital infusions of a kind: seed money sent in the form of remittances from relatives overseas, most of them in the United States and Spain.
A recent decision by the Obama Administration that allows any American to send up to $2,000 a year to Cuba could make such loans even easier.
Castro has said the economic overhaul is intended to update Cuba's socialist economic model and is not a wholesale switch to capitalism.
The newly approved credit measure "supports the updating of the Cuban economic model," Granma said Wednesday.