By Pascal Fletcher in Havana - The Financial Times Limited , 21 Mar 2000 01:45GMT

High prices for oil and low sugar export prices are squeezing Cuba's credit-starved economy, prompting government calls for fuel-saving measures.

The government is reported to have created a special commission headed by Francisco Soberón, central bank president, to draw up measures to reduce energy consumption and cut oil imports in the second half of this year.

Oil and sugar are Cuba's single biggest physical import and export respectively. The deterioration in terms of trade for the communist-ruled Caribbean island caused by the price swings has placed an additional financial squeeze on an economy already burdened with an $11.2bn foreign debt and a 38-year-old US economic embargo that blocks its access to development loans.

At the end of 1999, the country's trade deficit was running above $2.7bn on an annual basis, although tourism receipts and the inflow of cash remittances from Cubans living abroad had helped to partially offest the impact of this on the balance of payments current account.

Copyright The Financial Times Limited 2000

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