28th May 2024

 Cuba’s Minister of Finance and Prices (MFP), Vladimir Regueiro Ale, has admitted that despite having updated the methodologies used to determine prices, Cuba’s government has so far not achieved its objective of reducing price inflation. 

“We have not achieved the effects we intended. Everything we have done that is new, even in terms of regulation, coordination, and price control, is insufficient for what our people are demanding of us. There is still a lot to do,” he told Cuban viewers of the television programme Mesa Redonda broadcast on 22 May. The broadcast was intended to indicate the state of Cuba’s finances. 

Acknowledging that “the greatest dissatisfaction that our population has …. is precisely with price control,” he said, “we have to be much more rigorous and, above all systematic.” 

Accepting that some prices remain high because they relate to imported products, he indicated that greater control is now required over the country’s informal market. “We are dissatisfied with the work that has been done and the leadership and systematicity in this sense, that there is speculation and there are prices that are totally irrational,” he said, criticising local officials failure to act. 

Quoting the price of chicken as an example, he said that price formation for the staple is being driven by the illegal market. The price at which it is being sold in this way has become a reference, according to Regueiro Ale, resulting in widespread price speculation. 

To address this, he told viewers, “a group of proposals” presented to Government will enable what he described as “effective action” that will have popular support. Looking further ahead, Rugerio Ale said that Government is clear that it is going to be able “to achieve a decrease in price levels that favours the purchasing power of the population in a sustainable way.” “But, he stressed, in the meantime, control regulations must be strengthened.“ 

During his lengthy exchange with the programme’s presenter, the MFP Minister also commented on the struggle Government is having to deliver the macroeconomic reform process announced in December 2023 which aims to address past economic mistakes and see renewed economic growth this year (Cuba Briefing 2 January 2024). 

Speaking about the country’s fiscal deficit, Regueiro Ale suggested that any guarantee of macroeconomic stability is likely to take time. “We cannot only see the fiscal deficit in a period of one year. We must rectify the growth dynamics towards a line of gradual reduction,” he told viewers. 

Observing that government income this year is not sufficient “to guarantee the expenses that must be incurred” to cover the 63% of expenses intended to finance research and science programs, health, education, social assistance, and other social programmes, he confirmed that to finance shortfalls sovereign bonds are being issued that will allow financing “to be captured from the banking system to cover the income deficiency.” 

Speaking about taxation, he noted that while there had been a significant growth in income of about CUP339bn, and measures introduced to enhance tax collection, expenses had grown faster, in part to meet the need to increase salaries in the health and education sectors and to subsidise energy prices. 

Stressing the importance of boosting income, he said, that as it will not be possible to exceed a deficit of CUP147,000mn, Cuba’s budgeted state and non-business sectors must avoid superfluous expenses and “work systematically to boost income.” 

During the one-and-a-half-hour-long programme the minister also noted: 

• It has been possible this year to provide a timelier notification of the budget to provinces, municipalities, agencies of the Central State Administration, and all associations linked to budget financing. 

• Priorities are now being set for 2025, and related directives created. 

• Elected municipal assemblies rather than administrators are now required to present proposed devolved budgets to the Ministry of Finance and Prices. 

• The MFP must present monthly the status of budget execution to the Executive Committee of the Council of Ministers, and report on the size of the fiscal deficit to enable adjustments to be made. 

• The MFP’s power to redistribute resources has been restricted so that all savings are put towards reducing the budget deficit. 

Looking ahead, Rugerio Ale said that the MFP is proposing as a priority for 2025 greater coherence in the planning and budgeting process in relation to the development strategy of each municipality. In that way, he suggested, it should be possible to mobilise all the financial and economic capacity of a territory for its development to strengthen our economy. But, he told viewers, “we still have a long way to go.”