Cuba evaluates launching a “macroeconomic stabilization program” in the face of the crisis

The leadership of the Communist Party of Cuba (PCC, the only legal one) is studying launching a macroeconomic stabilization program that will address the current monetary, financial and fiscal imbalances, in addition to getting the country out of the deep crisis it has been suffering for three years.

The VII plenary session of the Central Committee of the PCC, a two-day meeting that concludes this Saturday in Havanaevaluated this emergency plan along with other economic measuresas reported jointly by the websites of the political party and the country’s presidency.

Among the 15 new points that have been proposed in this meeting to be included in the Guidelines of the Economic and Social Policy of the Party and the Revolution is a “macroeconomic stabilization program”something that different independent experts had demanded in recent months given the deterioration of the country’s indicators.

It is “a macroeconomic stabilization program that establishes a monetary, exchange, financial and fiscal environment to promote the recovery and growth of the economy, the convertibility and functions of the national currency and the reduction of inflation.”

Among the other new guidelines, those that pursue “the effective process of de-dollarization of the economy” and the establishment of an “economically based and stable” exchange rate stand out, so that “variables and prices” are not “administratively fixed,” but rather “reflect the conditions of the economy”.

In this sense, the plenary session also proposed eliminating a previous guideline that advocated continuing to implement the so-called Ordering Task, a package of reforms that sought to end monetary duality in the country and has generated serious micro (loss of purchasing power) and macroeconomic imbalances. (inflation, deficit, dollarization).

Other new guidelines aim to “reduce the monetary emission associated with fiscal and quasi-fiscal activity” to tackle the inflation and the loss of purchasing power of salaries and pensions.

cubto It is going to close its fourth consecutive year with a deficit above 10% of the gross domestic product (GDP).

Crisis

The person in charge of presenting these guidelines proposals at the plenary session of the PCC central committee was the Minister of Economy and Planning, Alejandro Gil, who had previously outlined the situation in which the island finds itself.

Gil acknowledged that the Government’s macroeconomic forecasts for this year will not be met, shortly after the Council of State approved this week a reform of the 2023 Budget Law to increase the fiscal deficit by more than 44%.

Evidence of the situation in which the country finds itself are the “priorities” that Gil listed: maintaining the “basic basket” – the basics, increasingly scarce, distributed by the Government at highly subsidized prices), “electricity generation” and “the availability of fuel, sanitation and other vital products.”

The minister indicated that the effects of blackouts fell 32% this year compared to the previous year (despite the fact that parts of the country suffer daily outages) and estimated that inflation in the formal market will be 30% at the end of the year ( which represents a slowdown compared to 2022, although still at painful rates for the economy and people).

Cuba has been suffering for three years from a serious crisis with shortages of basics such as food, medicine and fuel, runaway inflation, partial dollarization of the economy and frequent blackouts, which has generated an unprecedented wave of migration and social unrest (including protests that have been harshly repressed).

Behind this crisis are the consequences of the pandemic and the tightening of US sanctions during the Donald Trump Government (most of which have not been repealed by his successor, Joe Biden), but also certain decisions in Cuba’s economic and monetary policy. .