Omar Everleny

Omar Everleny

ATMs of the Banco Metropolitano in Havana. Photo: Otmaro Rodríguez.

Monetary unification: to be or not to be

In recent weeks, multiple reports have appeared on television, articles in the press, and statements that suggest that the long-announced monetary unification will finally take place soon. I mean, now the wolf is really coming. On other occasions, the process has been stopped by assessments of its complexity and other unforeseen events, but now, is what is really intended a monetary unification? Normally, specialists describe the processes that have already taken place, give assessments, or offer suggestions on which paths will be taken, but they rarely make predictions about what will happen, since forecasting politicians’ future decisions is not usually within the scope of our faculties, since the future should not be predicted given that it’s unpredictable. However, in the face of such a momentous and long-debated event, allow me to make some assessments about something that could happen in the short term. First, we must remember that at the end of 2019 the sales mechanism in USD was created, with a limited list of products and through credit or debit cards. Sales in USD were recently expanded to food, toiletries and hygiene products, hardware, etc. It is to be expected that a recently extended mechanism necessary to attract freely...

Photo: Otmaro Rodríguez

New measures or implementation of what was approved?

Help us keep OnCuba alive In economics, a social science, there are rules and mechanisms that, if not used at the required time, result in many effects on society in general. Many times ideas previously pointed out by economists are put into practice only when the situation is urgent and no more solutions are in sight, and not infrequently it is shown that they were valid. Economists make their proposals based on what they have learned; policy makers also propose ideas; politicians propose and implement. They rarely coincide and, of course, they don’t have to coincide in everything. But what the managers may not want to understand is that there is always a political time, and that time was pressing in Cuba. Consequently, a strong injection was already needed for concrete results, not just efforts. What was expressed on July 16 by the Cuban leaders in the Mesa Redonda television program gives the necessary encouragement and oxygen to the situation the Cuban economy had been facing and is still facing. The critical situation of the lack of foreign exchange, the expected decrease of 8% of the economy in 2020, the continuous shortages of food and the shameful blockade to which...

Photo: Otmaro Rodríguez

Cuba: current economic emergencies for a post-COVID-19 context

The COVID-19 pandemic has plunged the world into mounting tragedy and shock. The loss of life, fear, the anxiety of the sick and confined; and then, the impact on the economy, have been the ingredients. The drop in production and employment; the decrease in supply (sometimes of essential goods); the rapid transmission of shock to demand; the rupture of global production chains, among other elements, reveal themselves as obvious and unexpected channels for the extension of a crisis that is affecting everyone. Cuba will definitely feel the immediate and combined impact of the disease and the negative economic shock. There will be a decrease in the availability of foreign currency―disappearance of the tourist market, difficulties in credit for defaults to countries and commercial creditors, probable decrease in remittances, decrease in exports of some items―and the impossibility of sustaining the usual invoice for imported goods (for consumption with emphasis on food and other vital goods for production processes). A growing paralysis of economic activity, a progressive deterioration of the income of the population and the treasury, increases in informality and job insecurity in the initial stages of recovery, and inflationary pressures around essential goods such as food, personal hygiene and cleaning...

Photo: Otmaro Rodríguez.

Lack of foreign exchange in Cuba

The financial situation Cuba has been experiencing is already a structural problem of its economy. There are multiple factors that affect the problem: from the increase in the actions of the blockade to internal weaknesses such as the failure to comply with investment plans, the fall in income from medical services and the decrease in different national productions for export, for example sugar, among others. In the near future, the effects of the pandemic affecting the world will also be intensely felt by the island, given the resounding drop of a main source of income, such as tourism. It is evident that the shortage of foreign exchange has produced a shortage in stores outside the regulated circuit. In the different markets, both CUC and CUP markets, the necessary products are missing to complete the basic monthly food basket. To “escapar” (to get along), as it’s said in Cuba. In these stores, there are long when the State stocks them with a product that in short supply― chicken, detergents, toilet paper and tomato puree, among others. There is an exhortation to avoid the crowds due to the spread of COVID-19, but at the same time the population is wearing itself out...

Photo: viajejet.com

Cuba: Is the monetary unification’s Day 0 approaching?

For some time now, social networks have been circulating lists of the new prices that must be implemented in the country after the so-called Day 0. They are logical considering that when that day arrives, the current exchange rate for Cuban state companies of 1 CUC (convertible Cuban peso) for 1 CUP (Cuban peso) must also be modified, which will lead to an increase in sales prices. But that logic ends when the increases in salaries or pensions that must necessarily accompany this process are published. Increases in products and services are proposed. One of the tables in the document, whose authenticity appears to be firm, shows a summary of the goods or services that will see their value increase. Tabla 1. Resumen de precios minoristas y tarifas de servicio a la población centralizada que se modifican a partir del Día 0 Conceptos - Precios o tarifas que se modificarán Canasta básica normada - 23 Productos iguales de TRD y MINCIN que unifican los precios - 35 Ventas liberadas en la red actual en CUP - 22 Productos agropecuarios en la red de mercados estatales - 28 Otros productos no alimenticios de venta liberada o regulada - 34 Medicamentos -...

Photo: AP.

Quo Vadis? The currency collection stores in Cuba and the patching up of the economy

We already saw how the need arose to implement a partial dollarization of the economy. First, to have the necessary fresh foreign currencies to restock the currency collection stores (TRDs) without waiting for the country's central liquidity (CL) allocations, nor the fear that CUCs are being collected without full backing in foreign currencies while not having to spend freely convertible currencies for the purchase of products to be sold. The measure also came as a result of the manifest evidence―already pointed out by many economists―of the exodus of capital to other countries, increased since the approval of changes in the migration and travel policy. To counteract this practice of exporting capital and importing merchandise that would later be marketed by individuals, as well as the power of the State to obtain benefits, it was also necessary to review the pricing policy for this type of sales using debit cards in dollars, applying lower coefficients for purchase prices to form the final sales prices. Otherwise, you could not compete with the prices of individuals, even with all the disadvantages they have to develop this activity compared to the state business apparatus. The measure has been justified as a way to obtain...

Cuatro Caminos Market. Photo: Taken from Cubatel.

The currency collection stores in Cuba and their goals

It was the first years of the 1990s and Cuba entered the so-called Special Period in Peace Time. To resist and get out of the deep crisis, Cuban authorities, especially Fidel Castro, announced that investments in certain strategic sectors, including tourism and biotechnology, would be prioritized. But both required a significant investment and would delay in making profits. A way to attract foreign currencies faster had to be sought. And that’s when there appeared, in 1993, the decriminalization of the possession of foreign currencies and the authorization for the population to acquire in foreign currency stores the necessary products that were already missing in the circuit of stores selling in national currency (CUP). It was explained that there were many people who had foreign currency and that what was already a reality was simply being legalized. But neither was the motivation to raise foreign currency from family remittances a secret. At the same time, the Exchange Houses, known as CADECAs, were especially established so that a part of the population could exchange the foreign currencies it had been sent, acquire CUP and thus combat the black foreign currency market. At that time, it was not necessary to exchange them in...

Photo: Kaloian

Ten necessary economic measures for Cuba

Economists propose ideas based on what has been learned, policymakers also propose ideas, politicians propose and implement. They rarely coincide, and they don't have to agree on everything, but what executives perhaps don’t want to understand is that there is always a political time and that in Cuba time is pressing. Therefore, a strong injection is needed for concrete results, not efforts. Exhortations and slogans were an essential part of a past time, and it can be said with satisfactory results, but the current context is different, and the measures to be applied must be different, more concrete, measurable and hopeful for the short term. If we analyze some economic indicators, we will be able to realize the urgencies to which the current Cuban government is subject. *Caption SELECTED ECONOMIC INDICATORS 2018 Estimated economic growth for 2019 Mining growth rates Sugar industry growth rates Manufacturing growth rates Agricultural growth rates Fiscal deficit Consumer price index in CUP national currency (Inflation) Commercial deficit of goods 9.111 billion dollars Sugar product exports   184 million dollars Mining exports 746 million dollars Food imports 1.929 billion dollars Fuel and lubricant imports in 2017 2.435 billion dollars Foreign trade surplus of services 10.247 billion...

Photo: Alain L. Gutiérrez Almeida.

Inequality and population at risk of poverty in Cuba

After the 1990s, there have occurred phenomena in Cuban society that suggest that the population at risk of poverty tends to increase. This results in a high inequality of income, inequality of opportunities and their being used by a part of society in the face of changes that have not included the entire population. In the Cuban case, a set of characteristics are present that differentiate it from the idea of poverty in other parts of the world, especially due to the existence of social programs of universal access without direct cost to the beneficiary―education, health, culture, sports, among others―and universal subsidies for a small part of rationed food. These are public policies that limit the impact of poverty and inequality, although by themselves they do not prevent them. Is poverty in Cuba a forgotten cause? Certainly not, but it seems to be far from resolved in the short term. Is there a specific program to eradicate it? It is not clear. So far there are specific policies to alleviate it, but not to eradicate it. Photo: Alain L. Gutiérrez Almeida. Poverty is not a coincidence Due to the policy that is being implemented and the...

Photo: Alain L. Gutiérrez Almeida

Cuba: A window that is opening

The Cuban economy began changing in 2010, with the authorization of a new era in private business and the publication of a decree law on self-employed workers (still using that “euphemism). By the end of 2015, the number of people engaged in that activity with valid licenses will probably be close to 510,000. And while the terms micro-enterprise and small business are not often heard, it is evident that this is not a theoretical question; in practice, they exist, as long as a legal status exists for “hired workers.” The implementation of non-agricultural cooperatives continues: 314 such coops were operating by December 2014 in economic activities that used to be mostly state-run, and 355 are currently operating. Approval was given to close to 500 cooperatives in an initial four groups; however, the fifth group seems to be frozen in time. Working cooperatives are going through difficulties, especially in the supply markets for their production. With regard to state enterprise, attempts have been made to deregulate it, give it more autonomy, facilitate its decentralization, and provide managers with greater decision-making powers. But the results are still not optimal, which indicates that this area still needs attention. With respect to the Mariel...

As part of the special zone, a modern container terminal was opened in the Port of Mariel

Relaunching Direct Foreign Investment in Cuba

Before 2013, foreign capital activities in Cuba were unusual, independently of the type of relations of production involved. For a long time, business done with foreign investment lacked an overall approach to the Cuban economy; investments were approved for individual links in the chain of production, and those links then faced difficulties in achieving the success of the cycle as a whole and the end result. This reality, as well as the use of a currency other than the national currency for carrying out all business, made foreign investment a sui generis practice in Cuba, despite the success of certain foreign companies that still exist. That is, even though there was less business, companies that continued operating until 2003 produced positive results. These International Economic Associations constantly increased their rates of total sales of goods and services, and that year they made more than $5.2 billion; exports amounted to more than $3.4 billion, and direct income for the country was estimated at about $600 million. The Cuban state, in a demonstration of  substantial pragmatism, saw itself obligated to relaunch the foreign investment variable starting in 2013, to speed up economic growth rates, an element related to the low percentage that...

Photo: Rolando Pujol

Cuban economy: results and prospects

he year 2014 saw the continuation of a tendency from the preceding years of a deceleration in GDP growth, with just 1.3 percent growth, far below the 2.2 percent projected. The principal difficulties accumulated in the first part of the year, where an important role was played by the sugar harvest—12 percent below projections; tourism—which had slower growth than forecast, 4.6 percent in that period; and agriculture, where many lines of production declined. Economist Jose Luis Rodríguez summed up the reasons for this poor performance: “a drop in external hard currency income, negative climate factors, and internal economic management deficiencies.” Photo: Rolando Pujol Restrictions faced in 2014 also had a repercussion on the State budget, although the budget deficit was 4.1 percent in relation to the GDP. Momentum in foreign investment was not encouraging, given that the year ended without any signed business, even though dozens of proposals were made by foreign actors, especially from Spain, Italy, China, Panama, Brazil, Mexico, Canada, Russia, France and Portugal. It should also be noted that Cuba maintained its policy aimed at meeting its external financial commitments and honoring pending debt, and in fact some major debts, such...

Mariel Special Development Zone: a window to the world?

In September of 2013, the Cuban State published Decree-law No. 313 “On the Mariel Special Development Zone” in the country’s Official Gazette,1 along with its accompanying regulations, Council of Ministers Decree-law No. 316, and the complementary legal provisions. The law defines the objectives of the Mariel Special Development Zone (ZEDM, for its name in Spanish), and the principal ones are: the transfer of advanced technology and know-how, and abilities referring to business management; access to external resources through foreign investment; job creation; development of infrastructure for contributing to economic progress; creation of a logistical system that would facilitate high levels of efficiency in import, export and distribution process; stimulating the formation of national and foreign businesses; and, logically, its articulation with the rest of the economy, among others. The facilities provided for both Concessionaires2 and Users3 are the existence of that group of laws itself and the port, road and rail infrastructure that is being built with help from a Brazilian loan, and which should make it possible by January 2014 for the new terminal to be ready to receive the first container ship with Postpanamax dimensions (ships that exceed the maximum dimensions permitted for transit through the Panama Canal)....

A Bank for the Cuban Interests Section in Washington

In the absence of "normal" economic relations between Cuba and the United States, from time to time, disputes, closure of institutions, absence of agreements, fines for trading with Cuba, denial of visas between the two countries, and countless events, take place. While it is true that the Obama administration, in terms of relations between citizens of Cuban origin in the two countries, left behind the absurd actions of the Bush administration, the fact is that sanctions against companies and banks in the period has exceeded previous administrations, which means that it has intensified the blockade of Cuba, although Cuba is undergoing changes and transforms in economic terms. Another chapter of this misunderstanding of the current administration is not cooperating to eliminate restrictions on banks based in USA, whether domestic or foreign, to take on the bank accounts of Cuban institutions in that country, like both the Cuban Interests Section in Washington and the Permanent Mission of Cuba to the United Nations. In the modern world it is impossible to provide services if not done through banks or deposits made in them. Mutual relations should exist, because if Cuba guarantees bank deposits of U.S. institutions in Cuba, such as those of...

Economía cubana

Continuing economic transformations

When the new Council of State was elected on Feb. 24, 2013 for the next five years, along with the five presidents and the first vice president of the Councils of State and Ministers, it was evident that this generational changeover was the result of a high level of pragmatism among the historic generation, by including as Raúl Castro’s substitute a person who is around 50 years old, born after the Revolution. Also evident was the preponderant role that will continue to be played by the updating of the economic model in the coming years. That is, while the guidelines have a temporary reach, until 2015, the transformations for a structural change that the Cuban people need will require more time, if the goal is to make Cuba into a developing country. The 2013-2014 path has been charted to a certain extent, given the expectations for a new state enterprise law; the conceptualization of what kind of economic model should be built; the operation of urban cooperatives in the rest of the economy, and not just on an experimental basis; the elimination of the dual currency system and, with that, a better exchange rate that is...

古巴新移民法。潜在的经济影响。

我认为,古巴政府做出了一个明智的决定,国家有必要在目前的经济条件下的,采用该法令第302号,1312号法令修订“移民法”20 1976年9月。   在该法令的修订,包括对于那些永久离开国家的人的财产转移的可能性,新的法规建立,有必要废除1961年12月5日的989号法令,关于对古巴的国有财产,权利和移民行动的人的财产国有化,没收。 许多古巴家庭将受益于那些移民着的财产转让,虽然没有解决住房短缺问题,它本身在一定程度上缓冲这方面的需要,请记住上面的故事,这并不总是一个住房没收后还像住房一样,而是被用于其他目的。 从经济的角度来看,它通过立法,使国家获得新的资金,通过汇款或营运资金(投资资本)由国家及国有独资税代收机构将有更多的金融资源,内部财政平衡和再分配。 从这个意义上说,它是已知的,古巴的商品和服务的生产遇到困难,因此,这些领域和目标应引起足够的重视。为了实现在这些领域的发展将释放任何形式的财产的生产力,但对于这一点,需要财政资源,至少小规模的生产,这些可能来自国内的资源使它们有能力能够进入任何国际环节。

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