Ministers told economic situation still very tense, agree three priorities

10th July 2024

Cuba’s Council of Ministers has heard that the island’s economic situation continues to be “very tense.”  An official report of the Council’s monthly meeting held at the end of May, noted however, that improvements have been seen in some indicators. 

At the meeting, ministers agreed three strategic priorities and a related new management structure that it is hoped will enable Cuba to better respond to the continuing economic crisis facing the island.

Reporting on the meeting, Granma quoted the Minister of Economy and Planning, Joaquín Alonso, as saying that although goods exports “do not meet the current plan” they “show growth compared to the same period of the previous year.” In the case of nickel, he said, prices in the international market were improving, a trend expected to continue.

Elsewhere in his reported remarks he indicated that the production of mechanised tobacco production is recovering, and its workforce has been strengthened; medical services have an accumulated overcompliance of 7%; and tourist services in April exceeded their plan by 6%. No detail was provided. To help alleviate current economic challenges, he said, the island must take advantage of the reserves it has, to export coal given its rise in price on the world market.

Addressing the issue of the continuing high rate of official inflation, Alonso said that the monthly rate “showed a slight deceleration in April: from 4.07% in March to 2.13%. Compared to March 2023, year-on-year inflation, he said, reached 46.4%, but “has been slowing.”

More positively, the Minister of Finance and Prices, Vladimir Regueiro Ale, told Ministers that at the end of the first quarter of 2024 the forecast deficit in the State Budget had been reduced. At the end of March, he said, “a favourable execution was achieved with a deficit of CUP34.12bn pesos, 62.2% of what had been planned for, with the provinces of Havana, Sancti Spíritus and Matanzas showing surpluses. Gross income, he added, had been “overfulfilled by 4%, determined by the favourable behaviour of business results, the profit tax, and the return on state investment.”

He also noted that the tax system had recovered as the main source of income for the budget, in which context, he said, the “contributions of non-state forms of management are also growing.” Speaking about tax returns he described the outcome for 2023 as “extraordinary compared to previous years” following a campaign to encourage returns led by the Communist Party and Government in Cuba’s provinces and municipalities. Compliance in making a tax return stood at 99.8% of taxpayers, he told ministers.

On the subject of new priorities, the official publication quoted the Minister of Science, Technology and Environment, Eduardo Martínez, as telling ministers that it is hoped that a “new formula” will enable Cuba “to get out of the situation we have ….”  Martínez said that the initial priorities, will be concentrated in the three most relevant sectors due to their immediate contribution to the economy and society and in “a first stage respond to current economic problems.”

Outlining the new approach, he told ministers “priority one is the increase in foreign currency income from the export of goods and services.” All exportable items in the country, he said, must in future have added value, production costs must be reduced, and quality parameters improved.  “Projects to develop new exportable products must be a priority,” Granma quoted him as saying.

According to the Minister, the focus will now be on increasing nickel production, making tobacco income profitable, developing innovative biotechnology products, strengthening tourism, the development of new exportable medical services, introducing new technologies to increase sugar production and its derivatives, and the creation of a financial strategy that supports exports and minimises the impact of the US embargo.

The report went on to note that a second group of priorities relate to increasing the national capacity for the generation of energy through the installation of photovoltaic and wind parks; delivering an energy transition in the sugar sector using biomass and increasing its contribution to the national energy distribution system; and increasing the extraction of Cuban crude oil and improving its presently poor quality. This will require Martínez said, “a lot of science and the introduction of [new] technologies.”

The third priority, Martínez reportedly told the Council of Ministers, related to food production. This, he said, will focus on the immediate introduction of technologies to produce animal feed to enable an increase in the production of pork, eggs, milk and beef.

To achieve this, a Strategic Government Projects group, Granma noted, will have a national manager who, together with a work team, will define the objectives, execution schedule and the economic feasibility of what is proposed.  

“Execution of these projects will be considered a priority for all actors participating at each level – namely OACE (entities of the central administration of the state), OSDE (superior business management organisations), companies, science, technology and innovation entities, provinces and municipalities,” it reported. Oversight will be undertaken by Cuba’s National Innovation Council, a body headed by Cuba’s President.

No mention was made in the report of how rapidly the new measures can be implemented, the likely source or costs of financing, or when a positive economic impact might be felt.

Other matters of economic significance considered at the meeting included:

  • Wherever possible the need to reduce energy consumption by going to remote working, teleworking, changing jobs, and working in offices.
  • Disconnecting power at work centres at weekends to decrease electrical demand.
  • Having non-state businesses reduce demand for electricity, high consumers identified, visited, and “having the situation explained to them.”
  • Improving communications so that state entities explain and not promise what they are not capable of guaranteeing.
  • Providing greater support for workers in the power sector in response to the arduous working conditions they are experiencing.
  • And the importance of budgeted state entities introducing bidding processes and rational pricing.

Ministers also received a policy proposal relating to Digital Transformation, the Cuban Digital Agenda, and strategy for the development and use of artificial intelligence in Cuba, Granma reported.

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