Tag: Cuban inflation

DFrente Cuba Says New U.S. Regulations May Help Reduce Cuban Inflation     

On May 31, DFrente, a Cuban organization that seeks the refoundation of the Republic of Cuba, claims the new U.S. regulations regarding Cuba’s private enterprise sector may help reduce Cuban inflation.[1]

Its statement asserted that the new Regulations “offer a horizon of empowerment to the emerging MSMEs of the Island . These could achieve better access to computer services that are the central column of the functioning of contemporary economies; fluid access to the North American market; and allow a greater flow of foreign currency to Cuba, which would translate into an increase in remittances and therefore liquidity in the country.”

The organization also said the new Regulations “could contribute to mitigating inflation problems, facilitate the ability to import basic products that are so urgent today for our population, and perhaps untie some ‘knots’ that limit production.”

The new Regulations “could in some way affect the improvement of the very poor living conditions of the vast majority of Cubans.” DFrente, therefore, demanded that “the Cuban Government complete and implement the Business Law announced since 2022, and “that it remove all the obstacles that the Government itself imposes on the nascent private business community, on foreign investment and on the establishment of an effective economic model, in short, on the prosperity of the entire nation.”

The D’Frente statement continued: “There will be no definitive solution without the State returning sovereignty to the people, so that individual and social freedom can become the soul of the Republic that we deserve.”

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[1]   Declaration de Dfrente About the Recent Regulations of the Biden Administration (May 31, 2024); Dfrente Platform on new US measures: ‘they could help mitigate inflation problems’, Diario de Cuba (May 31, 2024)

 

 

Accelerating Inflation in Cuba 

Cuba’s official inflation reached 33.17% in March with fuel and food prices increasing the cost of living for the people. According to Cuban economist Pedro Monreal, “without an increase in food supply, it is difficult to assume that inflation in Cuba would be substantially reduced.” [1]

Another Cuban economist, Omar Everleny Pérez, on the basis of maximum prices from the state National Office of Statistics and Information (ONEI), estimated that the current cost of the minimum basic food basket for two people in Cuba is almost 20,000 pesos a month, which is much higher than the national minimum wage of 2,100 pesos.

Another major factor in Cuban inflation is the falling value of the Cuban peso in international markets. For example, on April 10, U.S. economist Steve Hanke, an academic at Johns Hopkins University, said that since January 23, the Cuban peso has depreciated 49% against the dollar.[2]

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[1] Inflation accelerates in Cuba: fuel and food dominate the rise in prices, Diario de Cuba (April 20, 2024);

[2] Euro and dollar, unstoppable, and the salary of Cubans increasingly meagre, Diario de Cuba (April 21, 2024)

 

How Cuban Government Fuels Inflation

Rafaela Cruz, a Cuban analyst for Diario de Cuba, asserts, “Ending inflation is not a priority for the Cuban regime.” Instead, “the Government exacerbates inflation as another [means] to maintain power and profit” by the following means:

1. “They raise taxes when economic activity is almost non-existent.”

2. “Subsidies (direct distributions) decrease when food is more expensive and scarce.”

3. Tax incentives for the creation of MSMEs are withdrawn even though their number is [very] low.”

4. “Castling is the monopoly of foreign trade, causing bottlenecks that make imports more expensive.”

5. “Salaries of some workers rise at the expense of [reducing] those of the rest.”

6. “Increase public spending by printing large amounts of money.”

7. “Prices of basic goods and services … rise.”

8. “The peso remains overvalued, which encourages imports.”

9. “Little, and poorly invested, in sectors far from domestic inspection.”

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Cruz,  nine reasons that show that the Cuban Government fuels inflation, Diario de Cuba (Feb. 28, 2024.