Cuban minister details elements of economic reform package

Speaking on Cuban Television, Cuba’s Minister of the Economy, Alejandro Gil, has outlined a complex economic reform package aimed at transforming and modernising the Cuban economy that retains the country’s centralised system of socialist planning. 

Gil told viewers of Mesa Redonda, the country’s nightly flagship television programme, that the overall economic strategy being pursued, and approved by the leadership of the country’s Communist Party, was an innovative strategy that would see a deep transformation in the economy. 

Gil said that the proposal comprises five elements, and that these will directly affect all Cubans. They relate, he said, to the production and marketing of food; incentivising exports; transforming the business system; improving the basis for self-employment; and new monetary regulations “which include the elimination of the monetary and exchange duality, but which has other elements” as well. 

Although much of what he spoke about has already been announced in a piece meal way, his presentation made clear that that the measures together amount to an economic reform package intended to make Cuba more efficient and productive in future. Although framed in the context of having to respond to the economic damage caused by COVID-19 and the tightening of the US embargo, the measures proposed appear to reflect the thinking of more reform minded Cuban economists who for some time have pressed for a more modern, dynamic, better organised, form of socialist economy. 

Gil’s remarks follow from the announcement on 8 October by Cuba’s President, Miguel Díaz-Canel that the process that will lead to the ending of the country’s dual currency system and to monetary and exchange rate unification will be “strategic in its scope” (Details Cuba Briefing 12 October 2020). 

During his presentation Gil provided more detail about several the policies previously announced and reported on in Cuba Briefing. Among the new points he made were: 

  • The sale of equipment and inputs in MLC (moneda libre convertible – freely convertible currency) to enable small enterprises to increase productivity and efficiency has begun in Havana, Villa Clara and Santiago de Cuba, and will be gradually extended to the entire country incorporating more products, including tractors and other equipment. 
  • Enterprises that generate foreign exchange through exports or sell into the Mariel Special Development Zone will be able to retain 80% of the currency they earn. 
  • Before the end of 2020, the Agricultural Development Bank will be able to support, through Banco de Credito Y Commercio (BANDEC), the productive activities of the best producers though a state fund of between CUP30m and CUP35m. 
  • Measures will be introduced that improve commercial activity by converging the roles of wholesalers and retailers. 
  • The State will maintain a regulatory role, but local governments will have a greater responsibility for pricing through reaching agreements with producers. “We are advancing towards a policy of territorial, local development, with greater autonomy from local governments”, Gil said. 
  • Plans will be introduced that transform state agriculture enterprises prioritising agro-industrial companies “organised in productive poles” that integrate cooperatives and individual producers, utilising science, innovation, and incentives to export. 
  • The way in which state enterprises are incentivised will change to form a fundamental part of Cuba’s future development strategy. Apart from workers being incentivised to increase production and improve profitability, the power to create, merge and end state companies will be decentralised, and the incorporation of subsidiaries companies will be allowed. 
  • Both the state and private enterprises will have guaranteed access to sources of financing through loans or state support. 
  • Similar conditions will be offered to state-owned companies (including the subsidiary company and micro, small and medium-sized companies), joint ventures, cooperatives and companies based on self-employment; a situation supported by monetary unification. 
  • In the case of the private enterprise, in future there will be a list of ‘prohibited activities’ rather than permitted activities. Any activity that does not appear on the new list will be permitted. 
  • Work is progressing on strengthening a wholesale market for the private sector. 

Gil also spoke about currency unification providing no new detail but assuring every Cuban that they will be protected when this takes place sometime before the end of the year. 

He told viewers that the process will involve “a profound transformation that the economy needs” and that it “will impact companies and practically everyone”. He, however, assured Cubans “there will be no shock therapy”, indicating that the vulnerable will be protected. He also confirmed that the measures will include changes to wages, pensions, the abolition of some subsidies and other measures which said will “favour the motivation to work and the need to work to live”. 

Gil explained that when introduced, the new regulations will address monetary and exchange unification, the elimination of excessive subsidies and undue grants, and will transform incomes. “The idea is to create more favourable conditions for the better economic performance of the country, which will result in a better quality of life for the population,” he said. 

The Caribbean Council is able to provide further detail about all of the stories in Cuba Briefing. If you would like a more detailed insight into any of the content of today’s issue, please get in touch