07 October 2024

Cuba’s macro-economic reform programme is not moving forward at the speed government requires and a “decisive moment” has been reached, according to a subdued official report of a 30 September meeting of Cuba’s Council of Ministers.

According to summaries appearing on the Presidency website and in Cuba’s  official media, Joaquín Alonso, the Minister of Economy and Planning, told colleagues that “the Government’s plan to correct distortions and boost the economy is a process that is moving forward, but not at the speed we want.”  

He described in some areas progress as only being “discrete,” and outcomes as “emerging.  The reform programme was agreed in December 2023 and is intended to restore economic growth this year (See Cuba Briefing 2 January 2024).

In a subsequent intervention, Cuba’s Prime Minister, Manuel Marrero,  told ministers:  “Today, the most convincing result we have is the reduction of the budget deficit.” Although “a number of very important actions have been implemented, the population still does not perceive it, because it has not yet had a direct impact on it,” he was quoted as saying.

Highlights in this issue: 

• Official Workers Union establishes section for non-state MSMES
• CDR’s take on wider neighbourhood social and security role
• US ‘humanitarian parole’ migrants must regularise status at end of two years
• China and Cuba agree to expand their advanced scientific cooperation
• Facilitation of business-to-business links with Eurasian Union companies discussed

Marrero went on to stress the need to “prioritise those issues that have a greater impact on the population,” and in particular the importance of combatting high prices and increasing production to improve the  quality of life for Cubans.

In the debate that followed, the First Deputy Minister of Economy and Planning, Mildrey Granadillo de la Torre, told the executive body that the country had arrived at a point in the process of correcting distortions and the planned relaunching of the economy that “is decisive.” 

Speaking about some of the measures introduced to exert greater government control over the economy and non-state enterprise, Granadillo de la Torre said that regulations requiring transactions to move online had seen electronic payments increase by 4% from mid-July to September. Despite this, she said, some 152,000 non-state entities do not have bank accounts open for the operation of their business and more than 300,000 fiscal bank accounts that have been opened have a zero balance.

Her comments appear to suggest a high rate of non-compliance with reform measures aimed at  capturing for tax and other purposes all non-state MSMEs and self-employed commercial transactions. 

Addressing the issue of price controls, she said that the process of continuing to monitor the maximum prices charged for six reference products (cut chicken, vegetable oil, sausage, powdered milk, pasta and powdered detergent) was continuing in relation to non-state outlets, as were efforts to address the violation of price controls through fines, so far she said, amounting to CUP348mn.

At another point in the meeting, according to Cuban official reporting, Alonso, the Minister of Economy and Planning, made clear that relations between state and non-state actors remains “a pending issue, since an adequate productive link between the different forms of state and non-state management has not been achieved.”

Describing efforts to integrate state and non-state business activities to create domestic supply chains,   he noted that progress so far has been slow. There were not, he said, effective complementary linkages between different entities or sectors adding value in each link of the chain. He observed that this also applied to the Mariel Special Development Zone (ZEDM) where he said weak linkages between its business entities and the national economy were affecting expected results.

Despite this, Ministers heard from the Minister of Finance and Prices, Vladimir Regueiro Ale, some positive news. The budget deficit, he told colleagues, is reducing because of cuts in expenditure and “the over-fulfilment of income.”

The budget, he said, showed a deficit of CUP32.1 bn, a figure lower than planned by CUP23.2 bn. Regarding falling expenditure, he said that the process of adjusting the budgets of the Central State Administrative bodies in the provinces was continuing “so that they correspond to the economic reality of the different territories.” He also noted that programmes for controlling expenses and boosting revenues were underway with some municipalities including Havana and Matanzas, and 54 municipalities now in surplus.

The reports quoted the Minister of Economy and Planning, Joaquín Alonso, as commenting that despite the “generally positive result” and the fact that “the adjustment to the current year’s Budget and Investment Plan has already been made substantially,” there remained a need to “maintain the work of control, evaluation and adjustment in the remaining months of 2024, as there are still reserves to be mobilised.”

Reflecting on the complex situation facing the economy, the official report of the meeting noted that “Prime Minister Marrero  emphasised that, in the midst of the lack of fuel, of foreign currency, of electric power, in the midst of all this, there are countless subjective issues that we have not yet resolved.”

“The first thing we have to do” he was reported to have insisted, “is to concentrate on resolving everything within our reach, because there is a lot of botching and there are many issues that do depend on us, and which we are not addressing ….”

In the face of so many difficulties, he stressed to ministers, we must “take on the subjective problems and each one in his own field, in the tasks that correspond to him and direct him, but also at the community level, which is where problems are first resolved.”

Addressing the meeting, President Díaz-Canel told ministers that the “distortions” identified between July and August meant that it would be necessary “to increase the pace of work” to contribute to “ordering the budget deficit” and to address relations between the state and non-state sectors.

He was quoted as saying that the progress so far made “gives us discreet solutions to begin to better control inflation and also the exchange rate of the Cuban peso.” “These discreet advances in macroeconomic indicators, he said, “have not yet reached the family economy, but they are beginning to put some elements in order.” Now we must work more decisively, he said, “it is a problem of organisation and control.”

No details were published on Ministers’ reported discussions on exports and imports, agricultural production, the preparation of the sugar harvest, and tourism activity.

The overall tone of the reporting was notable for its focus on the slow pace at which the hoped for macro-economic reforms intended  to deliver a return to economic growth this year are taking place; failures in delivery; the absence of any significant hoped for positive response by uncommitted Cubans; and the stress on the need for ministers and officials to do more to deliver better outcomes.

07 October 2024, Issue 1251 

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