27 March 2023

Cuba is relying on “the dynamic recovery of tourism,” the resuscitation of the productive sector, changes to state enterprises, and a better currency allocation system to deliver growth of 3% this calendar year, according to Deputy Prime Minister Alejandro Gil, the Minister of  Economy and Prices (MEP).

In remarks made to the annual audit meeting of the MEP, Gil laid stress on state enterprises assuming greater responsibility for outcomes, indicated that tax incentives would be introduced, and spoke about the creation of a new law for state enterprises.

In addition, he said, a new entity to manage non-state Cuban businesses would be created, and flexibility introduced into the state planning process “to recognise economic reality.”

These and other measures, Gil said, would be contained in a macro-economic stabilisation programme that will aim to rebalance the Cuban economy  and “guarantee a favourable environment that is conducive to economic growth.”

Speaking about the outlook for the Cuban economy this year,  the Minister said that the projected slowdown in the world economy due to high inflation, increased interest rates, and a reduction in investments presented “adverse risks”. This will mean, he said, Cuba will need to strengthen activities that generate exports, establish objective priorities, and create complementarity between state and non-state economic actors.

He also highlighted the importance of  the faster recovery of tourism in delivering a rapid recovery of the economy; the need for greater speed in addressing rising input prices; the importance of capturing more foreign exchange; the need to undertake the “internal transformation” of state enterprises; and accelerating the process underway of the decentralisation of power to the territories. 

Gil went on to say that government will address the negative issues that affected economic performance in 2022. In doing so he noted the partial dollarisation that has occurred between state companies and the non-state sector, retail price inflation, and the losses made by state enterprises.

Speaking about plans to transform state companies and devolve management responsibility, Gil announced that Government would this year begin to classify them to achieve their “effective performance as a main actor in the production of goods and services”. This, he said, would see in a proposed new Company Law, provision for the consolidation of enterprises, and their management model and governance classified in a review lasting up to the end of 2024.

He additionally told the meeting that the proposed macro-economic stabilisation programme will see work developed within the MEP on tax reform, the recovery of monetary balance, and “convertibility of the national currency.”

At the same time, he said, macro-economic governance and planning will be redesigned so that the MEP’s Coordination Committee has “the necessary technical analysis instruments and the capacity for decision-making with respect to macro-economic policies.”

State media reports of the meeting additionally indicated:

• That the role of the MEP in delivering Cuba’s National Economic and Social Development Plan, “will be strengthened.”

• The annual planning process will allow for “greater flexibility and adaptive capacity” in “the context in which the national economy now operates.” 

• It will be “necessary to defend the principle of not importing what can be produced in the country.”

• Traditional planning and regulation mechanisms will be transformed, combining their presently centralised character with decentralisation.

• The MEP will support the creation  of new economic actors.

• Greater emphasis will be placed on achieving efficient management of the investment process and on streamlining research.

• The currency allocation system will be reformulated, new self-financing schemes for exporting entities will be consolidated, and costs will be based on priorities.

• Control mechanisms will be created through the Directorates of the MEP in relation to the use of freely convertible currency and receipts prioritised.

• And measures will be introduced to mitigate the social impact of the new policies on Cubans.

In other reported remarks to the meeting, Cuba’s Prime Minister, Manuel Marrero, told attending senior members of Cuba’s Communist Party, Ministers, and the Minister-President of the Central Bank of Cuba and officials attending that while the impact of the US embargo could not be ignored, the macro-economic programme being proposed would become the “key and the guiding thread” in relation to future development. 

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