Cuban authorities, no longer able to disguise the situation, have assumed that the island’s economy is similar to “a war economy.” In the midst of a crisis that has surpassed the so-called Special Period of the 1990s, the Government of Miguel Díaz-Canel is resorting to another new package of measures that aims to promote the “stability of the macroeconomy” that the country needs, with changes that include budget cuts, a single price policy and some regulations and adjustments aimed at “correcting distortions and re-boosting the economy during 2024.”
It was at a recent meeting of the Council of Ministers that Mildrey Granadillo de la Torre, First Deputy Minister of Economy and Planning, said that the measures seek to adjust the 2024 Plan and Budget to the conditions of a “war economy,” a term often used in extreme situations, and which the authorities apply to a country that ended 2023 with 30% inflation at the end of the year, an economy that contracted by 2%, and a depreciation of the Cuban currency of more than 50% against the dollar and the euro in the informal market.
However, after a analysis in X Cuban economist Pedro Monreal said that using the term “war economy” would justify greater control by the authorities. According to him, it is used to justify total control because now “is when we need to plan the most and when we need to exercise control the most.”
The measures, published in the official newspaper Granmainclude a reduction “of the Budget items with the aim of reducing the fiscal deficit for 2024, starting from the non-executions; defining requirements in the budgeted activity for the use of the approved Budget, and centralizing the approval power; allocating monthly financial resources in correspondence with the real income of the month; calculating the fiscal impact of imports from non-state management forms; granting tariff benefits, including exemptions, for the import of raw materials and inputs for production, as well as concluding the tax system for electronic commerce.”
The Cuban government will also establish a single pricing policy, “inclusive and on equal terms for all subjects of the economy,” which includes both the state and non-state sectors. Various media have reported that products such as chicken, oil, sausage, powdered milk, pasta and detergent will have maximum sales prices in the so-called MSMEs, an issue that would alleviate the discontent that many Cubans have with the high and changing prices of these products in the private sector.
Monreal said that “the most striking thing” about the new measures —the date of their implementation is still unknown— was the intention to “postpone and even paralyze investments that are not essential.” He also emphasized that “without investment there is neither growth nor development, and until now the “essential” investments have been those in tourism. Will they continue?” he asks. These measures, according to a widespread interpretation, could not only exert more control in the country by the State, but also create discontent in the state sector, if they see themselves very limited in their business.
President Miguel Díaz-Canel said at the meeting that the country is going through “economic complexities” that impact the timely delivery of food that each Cuban household receives in a rationed manner through the so-called ration book, the constant blackouts or power cuts lasting several hours throughout the island, or even the inflation that today affects families’ access to basic necessities. The president insisted that the causes of this situation are often “directly related to bureaucracy and the inefficient control that we are carrying out from our institutional system.”
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