Photo: Roy Leyra / Cuba News 360
Text: Cuba News 360 Newsroom
Cuba is number one in the annual Misery Index compiled by economist Steve Hanke, a professor at Johns Hopkins University in the United States. The study, in which at least one hundred nations have been taking part for several years, basically puts the Caribbean island in first place due to its high inflation rate.
The main objective of the report is to determine how the average citizen of each country is doing economically. This is calculated by adding the seasonally adjusted unemployment rate to the annual inflation rate. According to reports, 156 countries were examined in preparation.
Photo: Jorge Luis Borges
The index places Cuba in first place with 1227 points, almost 500 points behind the secondranked country: Venezuela.
In the previous 2020 list, Cuba was the bestranked country in Latin America, but now it is the first with a dramatic drop. Hanke calculated Cuba’s unemployment rate at 3.7%, inflation at 1221.8% and the nominal interest rate at 2.3%, sum from which he subtracted the 0.2% that increased per capita GDP last year.
Photo: Jorge Luis Borges
“Cuba could easily solve its inflationary crisis by installing a currency board, as Dr. Kurt Schuler and I proposed in Monetary Reform for a MarketOriented Cuba (1992). A currency board issues convertible bonds and coins on demand in a foreign anchor currency at a fixed exchange rate. It is required to hold reserves in anchor currency equal to 100 percent of its monetary liabilities. A currency board’s currency is a clone of its anchor currency. Currency boards exist in about 70 countries. No one failed, says Hanke in the summary of the report.
The methodology used by the university professor to create the indicator gives a strong weight to inflation because it influences the nominal interest rate even when the real interest rate is negative (i.e. lower than inflation). In a way, this duplicates the same factor.
Other countries also high on this list are Sudan, Lebanon, Zimbabwe, Argentina, Suriname, Angola, Brazil and Iran.