Tag Archives: General Economic Analyses

Nuevo Libro: APUNTES SOBRE ECONOMÍA CUBANAY COVID-19

CENTRO DE ESTUDIOS DE LA ECONOMÍA CUBANA, Universidad de la Habana.

COMPILADORES: HUMBERTO BLANCO ROSALES y BETSY ANAYA CRUZ

Febrero de 2021

ISBN: 978-9945-9278-3-2

Complete Text of Book

INDICE:

A modo de introducción: otra pelea cubana contra los demonios/ Humberto Blanco Rosales y Mayra Tejuca Martínez

Reflexiones en torno a la nueva estrategia para el desarrollo económico y social de Cuba/ Betsy Anaya Cruz

Implementación de la nueva estrategia económica y social: una mirada desde la gestión/ Humberto Blanco Rosales

IED en tiempos de COVID-19: ¿qué podemos esperar?/ Juan Triana Cordoví

Cuba: apuntes sobre comercio exterior y COVID-19/ Ricardo Torres Pérez

Alimentación en Cuba: impactos de la COVID-19/ Anicia García Álvarez

El turismo mundial y en Cuba pospandemia/ Miguel Alejandro Figueras

Teletrabajo en tiempos de COVID-19: oportunidades y desafíos para Cuba/ Dayma Echevarría León

Trabajo por cuenta propia. Pre y posCOVID-19/ Ileana Díaz Fernández

La banca comercial tras la COVID-19/ Francisco Fidel Borrás Atiénzar y Oscar Luis Hung Pentón

De los autores

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WHAT WILL IT TAKE TO SALVAGE CUBA’S ECONOMY?

Mar 12 2021

On March 9, 2021, the Inter-American Dialogue hosted the online event What Will It Take to Salvage Cuba’s Economy?”. The event featured opening remarks from Michael Shifter, president of the Dialogue, who also served as the moderator. The panel of experts included Pavel Vidal Alejandro, professor of Economics at the Pontificia Universidad Javeriana de Cali, Colombia; Ted Henken, associate professor for the department of Sociology at Baruch College, CUNY; and Vicki Huddleston, retired US Ambassador & former chief of the US Interests Section in Havana. The panel explored what effect the Cuban’s government 2021 economic reforms will have on the economy, the private sector, and Cuban foreign relations.

WATCH THE FULL RECORDING OF THE EVENT HERE:

Vidal Alejandro started by highlighting the Cuban government’s historical resilience in terms of getting through the hardest of economic and political times. He compared the current moment to the Cuban government’s economic decline after the collapse of the Soviet Union in the early 1990’s. Although the contemporary and historical struggles are different, he was confident that the Cuban government will eventually figure out how to navigate their economic reforms and all that comes with it, as they once did three decades back.

Both Vidal Alejandro and Henken recommend expanding the private sector and allowing businesses more freedom as a strategy to revive the Cuban economy. Henken stated that “Cuba went from a situation where the government told you what you could do to now the Cuban government telling you what you can’t do.” He further affirmed that while it is positive that the Cuban government is listening and changing things based on feedback, the slower the reforms come to place, the more the people that will leave the country. All the panelists agreed that only time will tell if the Cuban government carries through with its promises and enforces its new policies.

Huddleston suggested that the Biden administration should allow for higher levels of remittances, Covid-19 cooperation, and humanitarian assistance. She also emphasized on the importance of reviewing Cuba policy in order to remove sanctions, which have hurt the Cuban people. According to Huddleston, there are multiple avenues for the United States to capitalize on Cuba’s economic reform and forge a renewed relationship with the Cuban people.

Overall, panelists were optimistic about the future of the Cuban economy and the prospects for foreign investment. The new single national currency and official exchange rates will make it easier to calculate return on investments and to understand financial risks around projects in the island. In closing, it was mentioned that what remains to be seen is whether or not the government will continue to let go of some of its control: banning less and less activities and taking constructive criticism from the entrepreneurial sector, a previously unheard-of act. The speed at which the Cuban government makes these reforms is critical due to the growing impatience of Cuban professionals who are deliberating whether or not to leave the country.

WATCH THE FULL RECORDING OF THE EVENT HERE:

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SUGAR HARVEST NO SWEETENER FOR CUBA’S AILING ECONOMY

By Marc Frank

HAVANA (Reuters) March 12, 2021

Original Article: Cuba’s Sugar Harvest arvest

Hopes in Cuba that sugar exports would soften an economic slowdown and plug an exchangeable currency gap appear in vain, with state media reports of output at least 200,000 metric tons short of forecasts for the end of February.

While no longer a top export and behind other foreign revenue earners such as medical services, tourism, remittances and nickel, sugar still brings Cuba hundreds of millions of dollars a year from exports, including derivatives, while also producing energy, alcohol and animal feed at home.

Like other industries, agriculture and cane cultivation face structural problems in the Communist-run import dependent command economy, which the government is only just addressing.  In the last six months it has adopted monetary and other market-oriented reforms, but these will take time to kick in.

Julio Andres Garcia, president of the Caribbean island nation’s sugar monopoly AZCUBA, said in December that the state-owned industry would produce 1.2 million metric tons of raw sugar in 2021, similar to the previous year.

Cuba’s output has averaged around 1.4 million metric tons of raw sugar over the last five years, compared with an industry high of 8 million tons in 1989.

The harvest runs from November into May with peak yields from January through mid-April.

Reuters estimates based on available data and local sources that this year’s harvest will come in under one million metric tons of raw sugar for the first time since 1908, and perhaps as low as 900,000 tons, a 25% decline.  All 13 sugar-producing provinces were behind schedule as March began, and the five largest producers Ciego de Avila, Camaguey, Villa Clara, Holguin and Las Tunas provinces by between 25,000 and 50,000 metric tons of raw sugar each.

The harvest has been plagued by a dearth of fuel and spare parts for mills and machinery, cane shortages and low yields and a COVID-19 outbreak in at least one of 38 active mills.

Cuba consumes between 600,000 and 700,000 metric tons of sugar a year and has a 400,000 metric ton toll deal with China.

Tough U.S. sanctions and the pandemic, which have gutted tourism, have cut into Cuban foreign exchange earnings causing scarcity, job losses and an 11% economic contraction in 2020.  So far this year appears no better, with the pandemic keeping visitors away, no change in U.S. policy and the scarcity of foreign currency leading to shortages of fuel, agricultural inputs and a general scarcity of even basic consumer goods.

The government reported that foreign exchange earnings were just 55% of planned last year, in part because the harvest came in 300,000 metric tons short, while imports fell between 30% and 40%. It did not provide further details.

“There is no reason to believe the shortfall will be made up and every reason to believe it could become worse,” a Cuban sugar expert said, requesting anonymity due to restrictions on talking to foreign journalists.

Fidel, Machetero, 1969
Repairs before the Zafra, Central Australia, 1995
Zafra, Canecutters, Oriente Province, 2021
Firing Up the Mill, 2021
Mechanized Harvest, 2021
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LA UNIFICACIÓN MONETARIA Y CAMBIARIA EN CUBA: NORMAS, EFECTOS, OBSTÁCULOS Y PERSPECTIVAS

DOCUMENTO DE TRABAJO 2/2021,  5 DE FEBRERO DE 2021, REAL INSTITUTO ELCANO

Carmelo Mesa-Lago

Original Article: Mesa-Lago 2021 Monetary Unification

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CUBA: CRISIS ECONÓMICA, SUS CAUSAS, EL COVID-19 Y LAS POLÍTICAS DE RESCATE

 

 

 

 

 

Carmelo Mesa-Lago,  10/6/2020

Tema1

¿Cuál es el estado de la economía cubana en tiempos del COVID-19 y qué políticas de recuperación se prevén?

Resumen

Este documento se divide en cuatro partes: (1) un análisis de la crisis económica en Cuba, con indicadores macroeconómicos internos y externos; (2) una examen de las cuatro causas de la crisis, una interna y tres externas (persistencia de la planificación central, recorte en la ayuda económica venezolana, sanciones de Trump y COVID-19); (3) una descripción de la evolución y efectos en la salud de la pandemia; y (4) una revisión de las potenciales opciones para afrontar el COVID-19 y salir de la crisis económica, así como recomendaciones de organismos regionales para hacer frente a la recesión en América Latina y su potencial aplicabilidad en Cuba.

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Conclusiones

Cuba está sufriendo una severa crisis económica y parece haber muy pocas políticas (internas o externas) capaces de generar una reactivación. Hay un consenso entre la mayoría de economistas académicos cubanos (y también extranjeros) de que la única salida está en retomar las reformas estructurales interrumpidas y acelerarlas y profundizarlas. Ricardo Torres (2020) apunta que: “… una situación extrema como esta debería servir de catalizador de las transformaciones que requiere el modelo cubano… es hora que se reconozca que el esquema de producción y distribución actual es un rotundo fracaso y requiere ser revisado desde sus fundamentos. En esa revisión el sector privado y cooperativo debe ser empoderado”.

También sugieren un grupo de economistas cubanos (entere los que se encuentra el autor) tres medidas que Cuba podría adoptar internamente, sin necesidad de ayuda internacional, para salir de la crisis y propiciar el desarrollo económico-social (véase Mesa-Lago et al., 2020).

Escasez de alimentos

Para aumentar la producción agrícola, Cuba debería seguir las políticas de China y Vietnam: autorizar a todos los productores agrícolas a que determinen por sí mismos qué sembrar, a quién vender y fijar los precios en base a la oferta y la demanda. Estas políticas terminaron con las hambrunas periódicas en los dos países asiáticos, ahora autosuficientes. Hoy Vietnam es un exportador neto de productos agrícolas y envía a Cuba 350.000 toneladas de arroz anuales, que la isla podría producir. Esto requiere eliminar el ineficiente sistema de acopio. Las compras estatales obligatorias de la mayoría de las cosechas a precios fijados por el Estado, inferiores al precio de mercado, son un desincentivo. Si Cuba siguiera las reformas sino-vietnamitas, con las adaptaciones necesarias, podría alcanzar autosuficiencia alimentaria en cinco o seis años, terminar con la importación por valor de 1.800 millones de euros anuales de productos agrícolas y convertirse en exportador neto.

Desempleo visible y oculto

Es esencial expandir el sector no estatal, particularmente el trabajo por cuenta propia y pymes, muy dinámico antes del COVID-19 y esencial en la recuperación con creación de empleo productivo y eliminación del empleo estatal innecesario. Para ello se recomienda: (a) reemplazar la lista de actividades por cuenta propia autorizadas por una lista de actividades prohibidas; (b) autorizar a los profesionales a trabajar por cuenta propia y eliminar las barreras en el sector no estatal; (c) terminar la etapa experimental de las cooperativas de producción no agrícolas y de servicios y aprobar más de ellas; (d) establecer mercados al por mayor para suministrar insumos a todo el sector no estatal; (e) establecer bancos –incluyendo extranjeros– que provean microcréditos; (f) permitir al sector no estatal importar y exportar directamente; (g) eliminar los impuestos más gravosos al sector no estatal; (h) imponer el impuesto a las ganancias en vez de al ingreso bruto y permitir la completa deducción de gastos; (i) empoderar a una asociación independiente de microempresas para negociar condiciones con el gobierno y envolverse en la legislación pertinente; y (j) crear una vía para denunciar a funcionarios estatales corruptos que cobran sobornos a los trabajadores del sector no estatal (Díaz, 2020).

Inversión extranjera

Todos los economistas cubanos la consideran fundamental. Para aumentarla es necesario implementar ciertas reformas, como: (a) autorizar a las compañías extranjeras a contratar y pagar directamente a todos sus trabajadores; (b) aprobar la inversión de capital extranjero (incluyendo a los cubanos en el exterior) en todos los sectores económicos, así como en las microempresas y cooperativas de producción no agrícolas y de servicios; y (c) publicar estadísticas actualizadas en áreas clave en que hay vacíos para infundir confianza en el exterior, como la deuda externa total (no sólo la negociada), la forma de calcular el IPC, incluyendo las operaciones en CUC que ahora se excluyen, y cifras más detalladas de las finanzas públicas.

Estas reformas y otras ayudarían a Cuba a salir de la recesión actual y generarían recursos para poder refinanciar los servicios sociales erosionados y establecer una red mínima de protección social para los sectores más vulnerables a la crisis.

Dos semanas después de un seminario virtual dictado por el autor, patrocinado por las universidades de Harvard, Columbia, Florida Internacional y Miami donde se propusieron dichas medidas, el periódico oficial Granma tildó dichas propuestas (y otras similares, como Monreal, 2020) de “neoliberales” (Luque, 2020). Sin embargo, un par de días después, en una reunión extraordinaria del Consejo de Ministros se exhortó de manera urgente a “cambiar todo lo que debe ser cambiado”, aunque dentro de los parámetros de la planificación central y en un mercado estrictamente regulado. Se ha especulado mucho acerca de dichos cambios, sólo el tiempo dirá si se harán y si finalmente Cuba toma el camino exitoso de la recuperación y el desarrollo sostenido.

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CUBA ON EDGE AS GOVERNMENT READIES LANDMARK CURRENCY DEVALUATION

Government is forced to act as it faces a dire shortage of dollars and collapse of tourism


Marc Frank
in Havana. Financial Times, September 30, 2020.

Original Article: Landmark Currency Devaluation

Cuba is stepping up plans to devalue the peso for the first time since the 1959 revolution, as a dire shortage of tradable currency sparks the gravest crisis in the communist-ruled island since the fall of the Soviet Union.

Two Cubans and a foreign businessman, all with knowledge of government plans, said the move to devalue the peso had been approved at the highest level. They said the devastating effect of the coronavirus pandemic on tourism, a fall in foreign earnings from the export of doctors and tougher US sanctions had created the worst cash crunch since the early 1990s, forcing the government to move forward with monetary and other reforms. The sources said preparations for the devaluation were well under way at state-run companies and they expected the measure before the end of the year. They asked not to be identified owing to the sensitivity of the subject.

The government declined to comment. Scarcity of basic goods and long queues at shops have been a feature of life in Cuba since the Trump administration pushed for tighter sanctions against the country in 2019. The shortages have been exacerbated by the pandemic because Cuba imports about 60 per cent of its food, fuel and inputs for sectors such as pharmaceuticals and agriculture.

The Cuban government has yet to provide any economic data this year but the UN Economic Commission for Latin America and the Caribbean predicts the economy will contract 8 per cent after a sluggish performance over the past four years. Most other foreign analysts say trade is down by at least a third. People queue to exchange money at a bank in Havana.

Cuba operates two currencies: the peso and the convertible peso. The government claims both are of equal value to the US dollar, but neither currency has any tradable value abroad and imported goods, when available, are priced with huge mark-ups when they are purchased in the domestic currencies. The Cuban public can buy the convertible peso for 24 pesos and sell it for 25 pesos, although the government sets different domestic exchange rates between the two currencies in some sectors, ranging from one peso to 10 pesos. For example, in the special economic zone at Mariel near Havana, one convertible peso is exchangeable for 10 pesos.

According to the sources and recent government statements, the peso will be devalued significantly from its current level on paper of one per dollar and the convertible peso will be eliminated. Economists have long argued that Cuba’s currency system is so unwieldy that it stymies the country’s exports, encourages imports and makes it difficult to analyse corporate profits. Cuba’s government has said it will respect the peso’s current rate for an unspecified period to allow people to exchange convertible pesos into pesos. It will convert bank accounts priced in convertible pesos. As monetary reform becomes a reality Cubans face a shortage of hard currency and will once again be allowed to make purchases in US dollars, though only with a bank card. This was last permitted in 2004.

It is legal in Cuba to own US dollars and other internationally tradable currencies, but until recently they were not deemed legal tender even when paying by card. There is a large black market in US dollars beyond the government’s reach in which the American currency has this year appreciated by more than 30 per cent when valued in the local currencies. According to the government there are now more than 120 official outlets which price goods in dollars, selling everything from food and hygiene products to domestic appliances, hardware and car parts, and the government plans to open more.

Many Cubans queue for hours outside dollar shops to obtain the products they sell. To do so, Cubans first need to open an account in which they can deposit cash or wire transfers in dollars or other hard currencies; they can then use a debit card to pay for goods in dollars. There are already more than a million dollar-denominated cards in circulation, according to local reports.

“Now, on top of everything else, I have to also worry about the value of my money and how to buy dollars on the informal market for the card because the state has none to exchange at the moment,” said Jenifer Torres in Havana, who said she had a good job but was supporting dependent parents at home.

Bert Hoffmann, a Latin America expert at the German Institute of Global and Area Studies, said: “Instead of monetary unification — for many years the government promise — Cuba is moving into an economy with two different monetary circuits.” These were “the dollarised debit card shops and the normal domestic economy, in which the Cuban peso will be under strong inflationary pressures”.

The Cuban economy is largely owned and run by the state, which sets exchange rates and many prices. As the cost of inputs increases due to the currency devaluation, state-run companies are likely to increase their prices — fuelling inflation. Alejandro Gil, economy and planning minister, said in July that the crisis was “exceptional” and announced the government would move towards market-orientated reforms and loosening of the Soviet-style central planning system.

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President Diaz-Canel

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CUBA’S ECONOMY WAS HURTING. THE PANDEMIC BROUGHT A FOOD CRISIS.

The island was able to control the coronavirus, but the dearth of tourists in the pandemic’s wake strangled an economy already damaged by mismanagement and U.S. sanctions.

By Ed Agustin and Frances Robles

New York Times, September 20, 2020

Original Article: Cuba’s Economy Was Hurting….

HAVANA — It was a lucky day for the unemployed tourism guide in Havana.  The line to get into the government-run supermarket, which can mean a wait of eight or 10 hours, was short, just two hours long. And better yet, the guide, Rainer Companioni Sánchez, scored toothpaste — a rare find — and splurged $3 on canned meat.

“It’s the first time we have seen toothpaste in a long time,” he said, sharing the victory with his girlfriend. “The meat in that can is very, very expensive, but we each bought one simply because sometimes in an emergency there is no meat anywhere.”

Cuba, a police state with a strong public health care system, was able to quickly control the coronavirus, even as the pandemic threw wealthier nations into crisis. But its economy, already hurting from crippling U.S. sanctions and mismanagement, was particularly vulnerable to the economic devastation that followed.

As nations closed airports and locked down borders to combat the spread of the virus, tourist travel to Cuba plummeted and the island lost an important source of hard currency, plunging it into one of the worst food shortages in nearly 25 years.

What food is available is often found only in government-run stores that are stocked with imports and charge in dollars. The strategy, also used in the 1990s, during the economic depression known as the “special period,” is used by the government to gather hard currency from Cubans who have savings or get money from friends or relatives abroad.

Even in these stores, goods are scarce and prices can be exorbitant: That day, Mr. Companioni couldn’t find chicken or cooking oil, but there was 17-pound ham going for $230 and a seven-pound block of manchego cheese with a $149 price tag.  And the reliance on dollar stores, a move intended to prop up the socialist revolution in a country that prides itself on egalitarianism, has exacerbated economic inequality, some Cubans say.

“This is a store that charges in a currency Cubans do not earn,” said Lazaro Manuel Domínguez Hernández, 31, a doctor who gets cash from a friend in the United States to spend at one of the 72 new dollar stores. “It kind of marks the difference in classes, because not everyone can buy here.”

He left the Puntilla supermarket with a cart full of fruit cocktail, cheese and chocolate biscuits that he loaded into a 1950s Dodge taxi.

Cuba’s economy was struggling before the coronavirus. The Trump administration has worked hard to strengthen the decades-old trade embargo, going after Cuba’s sources of currency. It also imposed sanctions on tanker companies that delivered petroleum to Cuba from Venezuela and cut back on the commercial flights from the United States to the island.

Last month, Secretary of State Mike Pompeo announced an end to charter flights, too. After the Cuban state energy company Corporación Panamericana faced sanctions, even cooking gas rations had to be reduced.  Then Covid-19 put a stop to tourism. Remittances sent by Cubans who live abroad began to dry up as the illness led to huge job losses in the United States.

That left the Cuban government with far fewer sources of revenue to buy the products it sells in state-run stores, leading to shortages of basic goods throughout the island. Earlier this year, the government warned that personal hygiene products would be hard to come by.

Cuba is facing “the triple threat of Trump, Venezuela and then Covid,” said Ted A. Henken, a professor at Baruch College and a co-author with A. Ritter of the book “Entrepreneurial Cuba.”   “Covid was the thing that pushed them over the edge.”

The pandemic, and the recession that followed, pushed the government to announce that, after years of promises, it would make good on a series of economic reforms intended to stimulate the private sector.

The Communist Party said in 2016 that it would legalize small and medium-size private businesses, but no mechanism was ever set up to do so, thus business owners are still unable to get financing, sign contracts as a legal entity or import goods. Now, that is expected to change, and more lines of work are expected to be legalized, although details have not been announced.

Cuba also has a history of offering reforms only to rescind them months or years later, entrepreneurs said.  “They go back, go forward, then back again,” said Marta Deus, the co-founder of a business magazine who owns a delivery company. “They need to trust the private sector for all its capacity to provide for the future of the economy. We have big ideas.”

The government puts the blame for the current situation squarely on Washington.  “Why can’t we export what we want? Because every time we export to someone, they try to cut off that export,” President Miguel Díaz-Canel said of the United States in a speech this summer. “Every time we are trying to manage a credit, they try to take away our credit. They try to prevent fuel from reaching Cuba. And then we have to buy in third markets, at higher prices. Why is it not talked about?”

Mr. Díaz-Canel stressed that despite the hardships, Cuba still managed a successful battle against the coronavirus: The health system did not collapse, and, he said, no children or medical professionals died of the disease.

With 11.2 million people, Cuba had just over 5,000 coronavirus cases and 115 deaths by Friday, one of the lowest mortality rates in the world. By comparison, Puerto Rico, with 3.2 million people, had five times as many deaths.

People who tested positive in Cuba were whisked away to the hospital for two weeks — even if they were asymptomatic — and their exposed contacts were sent to isolation for two weeks. Apartment buildings, and even entire city blocks, that saw clusters were closed to visitors.

Anyone flying in after March also had to isolate in quarantine centers, and medical students went door to door to screen millions of people daily. Masks are mandatory, and the fines for being caught without one are stiff.

With international flights at a virtual standstill, immigration officers are now assigned to stand guard outside quarantined apartment buildings, making sure no one goes in or out 24 hours a day.

At a quarantined building in Boyeros, a neighborhood near the Havana airport, an immigration officer sat in the shade while messengers and family members of those inside dropped off food. Daniela Llanes López, 21, left vegetables for her grandfather, who was stuck inside because five people in his building had tested positive.

“In Cuba, I don’t know anyone who knows anyone who got the coronavirus,” said Ms. Llanes, who studies German at the University of Havana, noting that she does know people in Germany who contracted the illness.

The strategies worked, although when the authorities started lifting restrictions in July, opening beaches, bars and public transportation, the nation’s capital saw an uptick in cases and a curfew was imposed there.

“Cuba is good in crisis and good in preventive health care,” said Katrin Hansing, a professor at Baruch College who spent the peak of the pandemic in lockdown in Cuba. Support for the government was notable, she said; even if the store lines were long, people felt safe from the virus.

Many Cubans are now hoping the economic reforms will stimulate the private sector and allow independent business operators to kick-start the economy.

Camilo Condis, an electrical contractor who has been out of work for months, said the changes must come quickly, and must allow Cuba to function, whether the United States is under a second Trump presidency, or under Joe Biden.  “Like we private business owners say here: ‘All I want is for them to let me work,’” he said.

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IS THERE A WAY OUT OF CUBA’S ECONOMIC CRISIS?

The economy is a failed subject that we must pass, said Omar Everleny Perez

By IPS-Cuba,  August 29, 2020

Original Article:   Cuba’s Economic Crisis

 

HAVANA TIMES – In a recent forum economist Omar Everleny Perez maintained that Cuba needs to make use of all its productive potential. Something he said hasn’t happened to date, especially the private sector, to stimulate growth and development.

“It’s time to advance in a new direction where private business isn’t seen as an evil. That appears to be overcome, but not completely. There is a long way to go, said the economist during the forum titled “How to Leave Behind the Crisis?”  The sponsor was the YouTube channel of the group Cuba es mi Patria.

The platform was created in March 2020, integrated by Cubans from inside the country and abroad. It hopes to contribute towards a democratic, economically prosperous and socially responsible country.

As a principle, the group rejects the United States embargo and its interventionist policies that affect life in Cuba.

Perez said the measures approved for the post pandemic period, “are better late than never, a very important step”. He recalled that many of them were approved in 2011 with the Communist Party “guidelines”. This reforms document, started by Raul Castro (2008-2018), was expanded in 2016.

Many economists had previously asked, why it takes so along to apply the reforms if they have all the political support? And they also criticized many of our positions, especially about small and medium size companies (PYMES), noted Perez.

“The main task now is to accelerate those decisions. It’s not enough just to say that the PYMES will be created. It takes speeding up the documents that make the task succeed. We shouldn’t work in the past, but for a future.”

Perez noted there has always been “a big distance between academia and decision makers, between researchers and the management system.” He believes that Cuba has better conditions today to promote the necessary changes. President Diaz-Canel’s frequent meetings with scientists and researchers is seen as a positive indicator.

Perez also considers it necessary to clear up some aspects in the reformed Constitution, in effect since April, 2019. One is the article prohibiting the concentration of wealth.

One area needing clarification, he said, is regarding imports and exports. Besides announcing the coming legal status to pymes, they already created the option to export and import to develop a business. “But, what’s the limit allowed for this activity?” We need more information, said Perez.

“The Chinese and Vietnamese weren’t concerned about those subjects (during their economic reforms process). On the contrary, they were concerned about people who lagged behind. It seems to me that Cuba has a divergent policy. It is more concerned about those who succeed than about those who have nothing.”

Perez says the country must change from general to targeted actions to protect vulnerable individuals and groups. “Let all those who can get ahead do so. And help those who lag behind, by using the national budget, social security, and food subsidies.”  Ideological contradictions have stopped the application of many of the topics approved in the Communist Party guidelines, said Perez.

He further noted that Cuban society has become unequal. They shouldn’t be providing the same rationed products to a restaurant owner and an 80-year old retiree.

Perez said the country has succeeded in important fields, such as health and education and others where it competes at international levels. But the economy is a failed subject that we must finally pass.

The US embargo

“The embargo is real, and it greatly affects the Cuban economy, but it is not the only problem. Cuba buys cheap chicken from the USA, but it has to be pay in cash. It goes further than the relationship among both countries. European entities and companies are fined, for example.

“Every month there is a new measure from the Trump administration. Their repeal won’t solve all the problems, but it would clear the way. It would finish the arguments that we can’t do anything because of the blockade. Access to credit from international financial entities depends on a better relationship with US. It happened during Obama administration (2009-2017).”

Currency

“The creation of the convertible Cuban peso was a good measure in the old days. But they began to print more CUCs than the USD existing in the Cuban banks. Now the CUC is not convertible, it is a useless currency. What will remain is the regular Cuban peso (CUP), in which 85 percent of Cuban population receive the salary. I don’t think the dollar will be eliminated again from our economy in the medium-term. We have to increase salaries and do a wage reform. The exchange rates used by state companies need a new approach, closer to reality. Thus, creating a fair competition with private companies.”

Hard Currency Shops

“In social and political terms, it is not an appropriate action, because not everyone has USD. The government realized there is a large sum of USD in the country, noticing they didn’t have any participation. The stores selling in hard currency are full of buyers, but since March 2020 there aren’t flights directed to Cuba. Where is all that USD coming from? Cubans use to go to Panama and Mexico to buy products and resell them in Cuba at a profit. The government decided to import some of those items to sell at half the price of the informal trade. The benefits were for Cuban citizens and the government alike.”

Foreign Debt

“The Paris Club cancelled 85 percent (8.5 billion dollars) of the Cuban debt and Russia, 90 percent (more than 30 billion dollars). Cuba asked to defer payments for two years because of the damage caused by the pandemic period and fall of the exports. But the Paris Club gave a them a term for one year. I heard that Cuba will resume payment in 2021.

The Cuban economy is in its worst moment. At the end of 2020, the foreign debt should be around 28.671 billion dollars. That represents around 27 percent of the 106.343 billion dollars calculated as Cuba’s GDP, estimates the Economist Intelligence Unit. The official yearbook for 2019 is not ready yet.”

Communist Party Guidelines

“Ideological contradictions have stopped the application of many of the approved changes. There has always been rejection to a private sector. The perception that an advance in this sector could cause the loss of social achievements. It’s not about copying the Chinese and Vietnamese models, but we must improve agriculture, and solve the food problem. Our economy has no way to go forward without production and tourism. This is a paralyzed country. Infrastructure is deteriorated, and with a different population, many of whom were born after 1990. All ideological obstacles should be left behind.”

Impact of emigration and the loss of young professionals.

“A Cuban engineer arrives to any market in the world and one year later is as competitive as any other professional formed in another school. We have highly qualified human resources. It’s a pity that they are educated here, resources are spent, and then because of the economic situation they go to other countries looking for opportunities. They could do this in Cuba if it would be allowed.

“Many of them go away because they can’t see a solution to their personal economic situation working in a state-run company with a monthly salary of 600 CUP (24 USD). We have to give them a motivation to reduce the exodus of this labor force. This is not only a problem in our country.”

Investment from the Cuban side

“Cuba must give the same treatment for national and foreign investment. There are concepts to change. Some areas will be limited, as security and defense. Many Cubans will be ready to invest if the government changes the rules of the game. It’s seed capital that is there.”

Imports through government companies

“The possibility to import is already recognized and that’s a good measure. However, there are state companies known for their inefficiency and we’ll see if private businesses can work with them. Let’s see in six months how the first operations go. There are still a lot of unnecessary controls.”

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Public and Private, Market and Plan: Some Lessons from Cuba and the United States.

Attached is the PDF of a P.Pt. presentation delivered at Kennesaw State University on October 24, 2019 entitled Public and Private, Market and Plan:Some Lessons from Cuba and the United State: 

    Public and Private, Market and Plan, Kennesaw, Oct. 24, 2019

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LA ECONOMÍA CUBANA Y EL SÍNDROME DE CONCHA

Por Juan Triana Cordoví

OnCuba News

Fuente: http://oncubanews.com/opinion/columnas/contrapesos/la-economia-cubana-y-el-sindrome-de-concha/

Plaf… o demasiado miedo a la vida es una película cubana de 1988 y podría decirse que es un metáfora anticipada y muy aproximada de nuestra realidad actual.

Concha es uno de los personajes principales de esa película cubana. Mujer divorciada y con un hijo mayor, por demás pelotero. Ella se debate entre la decisión de realizar un cambio drástico (comenzar una nueva vida mudándose con un chofer de taxi, hombre que la ama y al que ella ama) o seguir igual: encerrada en sí misma y en su pasado, soportando una situación interna difícil de sostener y enfrentada a agresiones externas (ataque con huevos) que la acosan sistemáticamente y sobre los cuales no tiene la posibilidad de influir.

Al final Concha muere de un infarto que le produce el sonido de una pelota de goma rebotando en una pared de su casa y que ella confunde con el sonido de otro huevo reventando en algún lugar de su hogar. La verdadera razón de su muerte, sin embargo, fue la indecisión y el miedo al cambio.

Cuba se debate en un problema parecido al de Concha. Es atacada por un enemigo externo que parece insaciable (Trump y los cubano-americanos de Marco Rubio y compañía, que ahora pretenden chantajear al mundo amenazando con poner a funcionar el título 3 de la Ley Helms- Burton); enfrenta una situación económica difícil y está abocada a cambios significativos tal cual anuncia el proyecto de nueva Constitución de la República. A la vez, padece de la permanencia de una testaruda resistencia a los cambios necesarios que de alguna manera ha conducido a idas y venidas en ese proceso de transformación tan necesario que exige nuestra realidad económica, política y social.

“El flamante restaurante Moscú. la calle P entre 23 y 21, ”

Esa resistencia ha generado costos muy grandes. Describo alguno de estos:

  • La tasa de crecimiento sigue siendo muy baja y está muy lejos de la tasa de crecimiento que necesitamos.
  • Las exportaciones de bienes siguen teniendo un comportamiento insuficiente y continúan concentradas en unos pocos bienes.
  • La dependencia de las importaciones se mantiene y no parece que tenga solución de corto plazo.
  • La presión fiscal no permite amplios márgenes de maniobra.
  • El empleo no crece y se ha precarizado.
  • El salario, a pesar del crecimiento del salario medio mensual, sigue siendo insuficiente.
  • El éxodo de personal calificado, especialmente jóvenes y mujeres que desangra a nuestra economía, se mantiene.
  • La tasa de inversión permanece muy baja respecto a las necesidades de crecimiento, prácticamente está a la mitad de esas necesidades y la ejecución de las inversiones sigue siendo insuficiente.
  • La deuda de corto plazo a proveedores y los dividendos no pagados a inversionistas extranjeros son una carga financiera importante, se convierten en incentivos negativos al crecimiento y generan incertidumbre a futuros inversionistas interesados en el país.
  • La empresa estatal socialista, responsable de al menos el 80% del PIB y mayoritaria como fuente de empleo, pilar de las transformaciones emprendidas hace unos años atrás, no alcanza a responder adecuadamente a nuestras necesidades de desarrollo y se ha anunciado será necesario repensar las OSDEs.
  • La inversión extranjera, declarada estratégica para el desarrollo del país no logra despegar y aun cuando ha mejorado su captación respecto a años atrás sigue siendo insuficiente y está lejos de nuestras necesidades reales.
  • Se mantienen brechas importantes –vertical y horizontal– en la infraestructura básica.
  • Existen brechas tecnológicas significativas en buena parte de nuestro sistema productivo.
  • El sector no estatal, cooperativas y propietarios privados en general, arrendadores de tierra y empleados en ese sector, aun espera por un marco legal más proactivo que le permita crecer cualitativamente.
  • Sectores decisivos, como la agricultura y la industria no terminan de encontrar una senda dinámica de crecimiento sostenido.

Esos son en buena parte los costos de esa resistencia. Todos ellos, o la inmensa mayoría, fueron objeto de análisis en la última sesión de la Asamblea Nacional.

Para Continuar: Triana, LA ECONOMÍA CUBANA Y EL SÍNDROME DE CONCHA 2019

Dr. Juan Triana

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