No one could deny that the Cuban economy has undergone important changes during the last 10 years. Today it is characterized by greater diversity in its forms of ownership and management, it has higher levels of decentralization, more openness to foreign investment, greater market spaces, etc. However, the deeper problems that cause the current crisis, beyond the harsh and undeniable impact of the policy of aggression, are still far from having been transformed to the extent and with the completeness possible and necessary.
A new attempt at a money market has recently been established, with the purpose of putting currency transactions in the national territory under the control and regulation of the Central Bank. Some of its objectives are to displace the dynamics of parallel markets, act on inflation and capture a greater amount of foreign currency that enters the country through different channels and that until now basically circulate through parallel circuits at an exchange rate reported from abroad.
This last decision has led to the coexistence of several official exchange rates, and the establishment of differentiated spaces of competition for the different economic actors, including citizens as individuals.
In reality, what is new with respect to the previous situation is the incorporation of a third official rate, its floating nature and the determination of the actors who attend it. The differential between the current official rates is enormous: 24, 120 and 410 (the latter is assumed to be permanently floating, responding to the movement of supply and demand and the regulation of the Central Bank).
Its operation as a place of transactions for both the sale and purchase of foreign currency has not been demonstrated in practice; The latter is essential because, as long as this does not happen, the spaces for a parallel market that pays better for the currency will not have been closed.
In our opinion, the gradual progress of these processes, until their necessary convergence into a single economically based rate, is a necessity, because otherwise very strong and abrupt impacts would be generated on large sectors of a fatigued population that would receive even greater inflationary blows.
However, this gradualness should not be synonymous with slowness and much less with paralysis, it should be part of a clear and transparent route in the articulated management of the country’s economic policy, including tax policy, social policy, etc.
Indeed, this diversity of exchange rates allows for the support of a subsidy for state companies and avoids greater inflationary impacts; A strong and abrupt devaluation of the business exchange rate would return, as happened with the regulation, to a new increase and greater rise in relative prices.
However, despite or perhaps also as a consequence, the vast majority of state-owned companies remain unprofitable or very low levels of profitability, which, among other things, prevents their greater contribution to the income and budgets of the central government and accentuates the current deficit in the supply of goods and services and thus deepens the recession.
This alternative to sustain the temporary and specific subsidies that the business sector requires through the application of differentiated exchange rates, with an overvalued exchange rate for these, is not the only way to do it, nor is it necessarily the most convenient. It is something that should be discussed in greater depth, but the serious problems of the business sector go beyond the subsidies to which they are subject through exchange rate policy or any other way that could be established.
The problem of low productivity and efficiency of companies is not the consequence of a single economic factor; It is the general functioning of the business system that is obsolete and must be subject to profound changes, including the effects of current bureaucratic planning, the insufficiency of markets, real and effective business autonomy, etc.
The establishment of a money market under the control and support of the State is a necessary factor of the economic reform that must be. This is what a good part of the most prominent economists in the country have been demanding. However, this is not effective in any way.
The evidence has shown ad nauseam how fundamental measures are nullified or have effects contrary to their pre-established objectives when factors such as the integrality of the transformations and the sequence that they must follow are violated. As we have pointed out, the most notable example of these errors, although not the only one, has been the monetary “organization” long studied by the Government team that was assigned this task and its implementation at once at the beginning of 2021. Its negative results have been and are present until today.
The diversity of exchange rates has been used in different countries under conditions that have been required, but, given the distortions that this creates, a great capacity on the part of the State to conduct and control the complexity of this process and an explicit exit plan towards a single rate is essential.
Another important and positive measure, as declared very recently by the Government at the last Havana Fair, has been the establishment of greater incentives and spaces for foreign investment.
A greater flow of resources is vital for the recovery of the economy. However, other factors are present and almost petrified in the general functioning of the internal economy that frequently nullify the possible effects of greater incentives for foreign investment. Of course, the country’s lack of payment capacity is one of them, but it is not the only one nor the only important one.
In the case of Cuba, relevant measures such as those discussed here—the establishment of a money market under the control and support of the central bank and greater incentives for foreign investment—are unlikely to have the positive and prolonged impact that is intended if they are not connected to a comprehensive program of restructuring the economic model and also the country’s development strategy. As of today, none of that is clear.
Without the advancement of these internal transformations, it would not be possible to take advantage of the new spaces that are opening up internationally as a result of the clear emergence of a multipolar world.
The recent measures that we have discussed here derive from the also recently presented and discussed government program to “correct distortions and reinvigorate the economy.” However, as we have expressed and argued in other texts, this is still far from being the necessary program for the accurate and systematic conduct of the profound transformations that the national economy urgently requires.
None of this is at odds with the need to address priorities, such as, for example, the great energy crisis that the country is suffering and which has worsened significantly. It is obvious that without energy almost nothing works and the economy cannot grow. There are also other priorities to which we have referred in other texts, but this cannot be an argument to lose what should be the strategic perspective of the transformation, without that there will be nothing lasting and no possible way out of the crisis. Despite the seriousness of the situation, a simple survival mentality should not be maintained.
There is no doubt that the Cuban economy is in very difficult conditions, subjected to a policy of aggression that openly proposes defeating the current government and changing the political system that gave rise to a revolutionary process that is approaching seven decades of difficult existence.
But its possible recovery does not depend solely on the cessation of this policy of hostility, the dynamics of which are beyond the reach of the Cuban Government. It also depends to a large extent, as we have argued at length in different texts and spaces, on the rapid, well-designed, profound and comprehensive restructuring of the national economy.
Time is pressing and pressing. The economy continues in free fall. The contraction in this year 2025 that ends takes the product to a level well below that reached 6 years ago. Are there easy solutions? Obviously not, but inertia, insistence on a clearly exhausted route, partial and disconnected measures should not be an option; The parts must integrate the whole in an articulated and coherent manner. It is economics and it is politics and it is also political economy. Without that comprehensive perspective there is no possible progress.
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