Cuba, crisis and dollarization: without currencies there is no country

The shortage of bread and rice, liquefied gas and gasoline, basic medicines and public transport, including daily blackouts. Many symptoms of Cuban polysis have their origin in a common problem: the lack of currency of a state that monopolizes vast sectors of the economy.

The liquefied gas company reported on Monday that it had no bullets (Bombones) until “The next import”, Just one day after a freighter with 24,000 tons of wheat roasts in Havana, where the manufacture of bread had been paralyzed due to lack of flour.

For weeks the queues in the Servicenters (gas stations) are perpetual and many electricity generation engines remain standing by imported fuel deficit, while large areas of the country suffer from 20 or more hours a day blackheads.

“There is a critical shortage of foreign exchange in the country”, The Cuban economist and a doctor of public policies Tamarys Bahamonde assure Efe.

Why doesn’t the Cuban state have currencies?

Independent experts consulted by EFE agree to begin with the sinking of national agricultural and industrial production, which has triggered imports, which represent 80% of what the country consumes, according to the United Nations.

In turn, the main sources of currency income – tourism, remittances, professional missions (mainly doctors), sugar, biopharmaceutical sector and nickel – have fallen significantly.

This has generated a strong imbalance in the State accounts, who exercises the monopoly of foreign trade and other key sectors.

“If there is no production that you can stop importing, we will not leave this vicious circle”, Says Cuban economist Omar Everleny, a professor at the University of Havana.

The financial situation is such that in the middle of last year the government began to decide the budget execution periodically, depending on the real income of each month.

How has this situation been reached?

The Cuban government underlines the weight of US sanctions and the financial effects of its inclusion in the list of terrorism sponsorship countries. The experts, meanwhile, highlight the internal causes (without denying the damages of the blockade or embargo).

Cuban economist Ricardo Torres, professor at the American University of Washington (United States), speaks of structural imbalances of decades and denounces a bad assignment: “More than a resource problem, it is a problem of use of money. ”

He explains that the government has financed in the last ten years a “Massive hotels construction“-A sector in the hands of Gaesa, the Army Business Consortium- despite very low occupancy rates.

“Seeing public numbers, I conclude that it is a country in crisis, without a doubt. But with that I cannot justify that there is not even wheat”, He says.

Can you improve?

The consensus among the experts consulted is that 2025 will be the same or worse than 2024, in which the economy contracted. After five years of serious crisis, the Cuban internal (GDP) product is below the 2019 levels.

They do not believe that the measures announced by the Government in the late 2024, including a deepening of the dollarization of the national economy from the State, will reverse the situation.

Not without controversy, the Government has begun to collect in Customs Procedures and Gasoline with greater octane, among others, in addition to reconverting part of its retail stores in establishments that sell in dollars.

Bahamonde sees in these decisions a tracing that were taken in the crisis of the 90s, and then reversed.

“It is a way to raise currencies. Is it a long -term measure? No will it guarantee economic development? No And growth? Neither. It is purely collection, rentier”, Says the economist, who speaks of“subsistence economy ”.

Is there a solution?

Everleny believes that many coordinated and depth reforms would be precise, something that does not perceive after the two adjustment packages approved in the last 15 months.

Bahamonde advocates flexible foreign trade, establish a real currency market, extend participation to the private sector in domestic trade, renounce the centralized administration model, and eliminate GAESA control over the Cuban economy, in general, and tourism, in particular.

“All solutions are medium and long term, but street people need today solutions. If no drastic, fast measures are taken, … the temporary horizon is moving away from the resolution, ”he warns.

In Everleny’s opinion, “The State needs long -term help, International Monetary Fund type“, Because the country has already reached the point of”break”

However, he does not see that option viable because Cuba does not belong to these international organizations and because he believes that the United States would not approve financing lines for Havana.