2023-12-30 00:16:25
When Prime Minister Manuel Marrero announced the macroeconomic stabilization plan, the president Miguel Diaz-CanelHe had to go out quickly to calm things down. He assured that the measures they do not constitute a “neoliberal package once morest the people”, but admitted that they involve “complex decisions, as complex is the moment” that he is going through Cuba. The Caribbean island has been in a serious situation for three years. economic crisis and shortages: Rampant inflation, fuel and medicine shortages and frequent electricity outages mark daily life in the country, where a new wave of emigration has been unleashed.
In view of this, the government announced for 2024 one of the largest adjustment plans in recent decades. This contemplates increases in the price of energy and the end of the universal subsidy for basic basket products.
Marrero alluded to the effects from abroad, such as the US blockade, but also formulated some self-criticism. His diagnosis of the situation, if anything, was devastating; The expected figures for income from exports were not reached, there is still a large foreign exchange deficit, the diversification of goods and services is not increasing, there is no sustained growth in production, especially food, and foreign investments are insufficient.
Subsidies to people, not products
The plan he presented aims to reduce State expenses, raising prices set by the government. At the same time, the aim is to reduce spending on subsidies, providing subsidies to people in need, instead of subsidizing products. It’s a paradigm shift. “It is not fair that those who have a lot receive the same as those who have very little. Today we subsidize the same to an elderly pensioner as to the owner of large private businesses who has a lot of money,” he argued.
This mainly affects the ration book, through which basic foods, such as rice, beans, oil, chicken and other products, are distributed equally to all Cubans, at highly subsidized prices. According to the Minister of Economy, Alejandro Gil, this costs Cuba regarding 1.6 billion dollars annually. The goal is to create a more fair and efficient system, Marrero said, ensuring that no one will be left helpless. Díaz-Canel, for his part, later dispelled fears that the “notebook” would be eliminated.
On the other hand, the government wants to adapt the official exchange rate of the Cuban peso (CUP) to the dollar. Marrero indicated that, for this purpose, a working group will be formed with the Central Bank. Currently, the official exchange rate is 24 CUP per dollar for legal entities and 120 CUP for private persons. In the informal market, the dollar has meanwhile risen to more than 265 CUP.
The figures of the crisis
On the eve of the National Assembly session in which the plans were announced, the government had released various macroeconomic data. GDP will decline by 1 to 2 percent in 2023, according to government estimates. Inflation rises to around 30 percent in the formal market. The informal one is much higher. Tourism has also not met expectations, with around 2.45 million visitors.
For this reason, other measures aim to reactivate the tourism sector, and also to promote the production of export goods, such as tobacco or rum, and to promote the import of inputs for production. The aim is to improve companies’ access to foreign currency, expanding electronic commerce with payments from abroad, and foreign investment will continue to be encouraged, especially in the field of food and renewable energy. From January 1, tariff increases and reductions will also be applied for private Cuban companies.
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