1706073264 Cuba is falling into economic shifting sands

Cuba is falling into (economic) shifting sands

Cuba is falling into economic shifting sands

What Lucía Caridad Torres wants is for her to take care of her, help her build her tobacco house and give her a life like a farmer's wife. When Hurricane Ian hit Cuban territories on September 27, 2022, the Tobacco Healing House was lost in the Las Barrigonas neighborhood of Pinar del Río Province. Since then he has not been able to harvest any more. No agricultural authority was willing to offer him the help he needed. “Nobody knows what those of us who live off the land go through,” says this 62-year-old woman. For this year's harvest, he not only lacks the wood to build houses, but also access to fertilizer and fuel. “We plant with oil. With what we grow, we will breed pigs and we will produce our own food.”

But nothing suggests that the peasantry and therefore food production in Cuba will improve, not even the package of measures announced by the government in December that includes increasing fuel prices by more than 500%. a 25% increase in the price of electricity, an increase in the price of LPG cylinders, and which, according to the authorities, aims to achieve macroeconomic stabilization in the midst of a crisis that many compare to the so-called crisis. called Period Special from the early nineties.

If there is an increase in the cost of living, is there a political will aimed at opening up and diversifying the island's economy? Cuban economist Omar Everleny Pérez Villanueva believes that in addition to being inconsistent, the new measures focus on the area of ​​circulation while they should focus on production. “In the short term, it will affect the population whose purchasing power has already declined sharply. “I don’t see any measure that will promote production in the medium and long term.”

Last year, Economy Minister Alejandro Gil warned that the “economy is in a complex situation,” recognizing the lack of milk for children and the little bread or coffee that reaches Cuban households through deliveries. Rationed monthly, which is now the case. Government subsidies are not possible. In 2023, 2.2 million eggs were produced daily, up from 5 million in 2020, and about 9,000 tons of coffee were reported, while domestic consumption required about 24,000. Pork production has been reduced by almost 90% and there have been declines in rice and beans, as well as a sugar crop of no more than 350,000 tons, which does not cover half of the country's needs.

These numbers mean hunger. When thousands of Cubans took to the streets on July 11, 2021, in historic protests that left more than a thousand political prisoners, people demanded “freedom” and shouted “We are hungry.” Three years later, Cuba has year-end inflation of 30 %, an economy that has shrunk by 2% despite forecasts of 3% growth and a devaluation of the Cuban currency by more than 50% against the dollar. The euro in the informal market.

“There is no political will to accept the transformations that the national economy needs,” says Cuban economist Mauricio de Miranda. “The extractive institutions are being strengthened and not the inclusive ones, which should unleash the productive forces that are today restricted by state control measures.” The government continues to invest in tourism, a sector hit by the coronavirus pandemic. In 2023, Cuba received 1.8 million tourists, significantly fewer than the 4.2 million visitors who arrived in 2019.

The outlook does not invite optimism. These are years of mistakes, corrective processes, measures that seemingly do not bring results, a tightening of economic sanctions by the Donald Trump administration against the island, a decline in oil aid from Venezuela and Mexico and an exodus of almost half a million people in two years .

In December, the Cuban government acknowledged the failure of the task order introduced in 2021, a measure that promised to lift the country out of stagnation with an end to currency duality and a reform of prices, salaries and pensions. However, the measure not only accelerated inflation but also did not resolve the partial dollarization of the economy.

State monopoly

In recent years, the government has taken other measures such as opening foreign exchange shops, foreign investment in some mixed capital companies and introducing banking for financial transactions. But none of these measures involved decentralization or the abolition of the state monopoly over industries and markets. They have not even allowed the full development of the so-called MSMEs, small and medium-sized enterprises, which were approved in 2021 and which marked an opening to the private sector on the island after decades of ban. “I think MSMEs have shown in a short period of time that there is enormous potential,” says Everleny. “Then we have to address the fact that one of the greatest potentials of this country is the private sector.”

De Miranda says that for Cuba to truly emerge from the crisis, the problem of currency and exchange rate duality must be resolved, industrial and agricultural production stimulated, markets liberalized and the centralized economic system dismantled. “The country needs bold economic measures that are not being implemented in the current authoritarian and totalitarian political system. For this reason, the necessary measures have not been taken to emerge from the crisis.”

Ingrid Febles, 54, left her job at the Cuban telecommunications company Etecsa in the city of Camagüey. He is awaiting his final departure from the country. “I don’t think we can get out of this crisis,” he says. “People don't see a solution to their problems.” Leonardo Villarreal, 41, believes that every measure taken has affected the Cuban family and that things are worse in the country than when he was 20. “We are of course worse than during the special period.”

As in the special period following the fall of the USSR and the loss of Cuba's most important trading partner, Cubans today suffer from hour-long power outages, limited transportation options and a shortage of food and medicine. But if the Cubans had anything, it was the hope of getting out of the crisis, and they have apparently lost that.

“What is happening today? Without fully surviving this special period, the country fell into a new crisis, but different, because the people no longer have hope,” says Everleny. “The state functions as if time were infinite and there is none “There would be time. The population is aging, more than 25% of the population is over 60 years old. And the government has already lost its credibility.”

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