Doubts surround the adjustment plan announced in December by the Cuban Government after two of the main measures – including a 400% rise in fuel prices – were postponed “until further notice” and the Minister of Economy was dismissed, Alejandro Gil.
Gil's dismissal Last Friday closed a key week for the Government's plans and which in the end was marked by the stopping of the first major measures and among the most unpopular within the package.
If the fuel increase had been applied, the price to fill a 40-liter tank would have been 5,280 CUP (44 dollars), when the average state salary barely exceeds 4,200 CUP (35 dollars, at the official exchange rate but 14.5 in the widespread informal market).
The increase, initially scheduled for last Thursday, was suspended less than 24 hours before, when the Government announced that the digital payment system of a state company had suffered a computer attack that prevented it from starting to apply the measure.
As a consequence, it was reported shortly afterwards, the Cuban Executive decided to also suspend the application of the increase in tickets for interprovincial buses, trains, ships and planes by up to 600%.
'Correct distortions'
Despite criticism from experts, dissidents, the independent press and many citizens on social networks, the Executive spent the past few weeks explaining in the state press that the plan is necessary and that the measures seek to “correct distortions” in the Cuban economy. .
Alejandro Gil, former minister of economy of Cuba.
The Cuban president, Miguel Díaz-Canel, emphasized that the measures would be applied only when the conditions are met, that vulnerable groups would always be attended to and that no one would be left behind.
In fact, he toured several municipalities to explain the Government's position. The authorities have recently stressed the importance of the package, after closing 2023 with a drop in GDP of between 1 and 2% and forecasting a fiscal deficit for this year of 18.5%. Díaz-Canel himself has spoken of “war economy.”
The plan – for which the rest of its measures still do not have a defined date for their application – also contemplates a new devaluation of the national currency and specific increases in electricity, water and gas rates.
The Government also plans to end the universal subsidy of products through the ration card, to move to a system in which people who are considered vulnerable are directly subsidized.
Cuban President Miguel Díaz-Canel.
Gil's dismissal
Gil's dismissal comes as a surprise as he is the holder of the portfolio who, in theory, should take the wheel during the implementation of the plan. The now former minister leaves a position that he held since 2018, just the year in which Díaz-Canel succeeded Raúl Castro (2008-2018) as president of Cuba and became the first president who did not belong to the “historic generation” that achieved the triumph of the revolution in 1959.
During his years at the head of the Economy portfolio, the controversial monetary reform of 2021 – called the Ordering Task – was launched, which sought to put an end to the double currency in the country and end the dollarization of the economy. However, the Government itself has recognized in recent weeks that it “has not met its objectives.”
The dollar, far from losing weight in the daily lives of Cubans, has skyrocketed in the informal market. Since the application of the Ordering Task, the exchange rate – 24 CUP per greenback for legal entities and 120 CUP per dollar for individuals – skyrocketed in the informal market until reaching 290 CUP per dollar this Friday.
This package also fueled inflation on the island, which in the year of its introduction (2021) was 77.33% in the formal market (in the informal market it was much higher), and reached 39.07% in 2022 and the 31.34% last year.
INTERNATIONAL EDITORIAL
*With Efe
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