When Ramiro found out about the new electricity rate that will be in force in Cuba as of January 1, as part of the monetary reorganization process, he lost sleep for a few days.
“I started to do the math and couldn’t sleep,” this 51-year-old electronics technician, who works in a state appliance repair shop in Havana, confesses to OnCuba. His new salary will be over 3,000 pesos, but only in electricity he can spend more than 2,000, if he does not manage to lower his household consumption from the more than 350 Kwh usually devoured by his family, made up of his housewife wife, his mother-in-law , now old and sick, and his daughter, who is studying at the university. “And if you add to that the prices at the agricultural market, those of anything on the black market and even those of the supplies on the ration book, I don’t know where we’re going to end up, and I don’t have someone to send me dollars from abroad,” he says.
It’s true that until now his salary was not enough, not even with his mother-in-law’s pension―which will also go up―and what his wife “invents,” so “to complete,” like many in his situation, he does his “little odd jobs,” but with the pandemic, he says, “things have become much more difficult.” In recent months, the shortage, both of food and toiletries and of the pieces he needs for his independent work, has dried up his few savings, while the prices “of what appears on the street” have not stopped going up. And as of January, he estimates, “they are going to get much worse.”
But after three or four haggard days, Ramiro decided to leave the adding and subtracting for 2021 and reconcile with sleep. “My wife told me that if I continued to grumble so much, I was going to have a heart attack and I would not reach the new year; that we’d get by, and you know what, she’s right. I also warned her to get ready to tighten our belts, and I asked my daughter to read well all the resolutions that have been drawn up with reorganization things, so that she can later explain them to me calmly, that she has a much better head than I. We’ll see how everything turns out.”
Ramiro’s concerns and worries are today those of a great many Cubans. All you have to do is walk through any the island’s cities, talk to people or listen to their comments in queues or on street corners, to know that nothing takes up their conversations and thoughts more than the already imminent monetary and exchange rate system, announced last December 10 by President Miguel Díaz-Canel. Since then, the authorities have released a barrage of information and details in the ongoing Gacetas Oficiales, Mesa Redonda TV programs, and newspaper articles, which included addressing the issue in recent sessions of the National Assembly. And, at the same time, they have received from the troubled population an avalanche of doubts and dissatisfactions that, they assert, will be taken into account to correct what “should and can be corrected.”
Just as Ramiro and millions of Cubans are concerned these days, one of the greatest risks of the process that officially begins in January is that it will generate inflation, leading to even higher prices. The former Minister of Economy and head of the Commission for the Implementation and Development of the Guidelines, Marino Murillo―who has defended the reorganization as something “essential” and that “cannot be postponed” for the Cuban economy―has recognized that “there are objective elements for inflation to take place,” such as rising incomes, supply deficits and rising costs in the private sector, and he has said that “the key will be how to control an unwanted inflationary process in magnitudes higher than the one estimated” by the government, so that the new nominal wages “do not lose capacity in terms of real wages.”
“We want to promote growth and move towards a macroeconomic environment where money fulfills its function,” he said last week in the National Assembly, where President Díaz-Canel and other authorities called on Cubans to collaborate in “the fight against speculation and selfishness.” But from renowned academics to “corner economists” are not exactly optimistic about it, beyond the intentions intended by the authorities.
“It’s a simple sum, pure supply and demand,” Alfredo, a retiree from the food industry, comments to OnCuba: “when things ‘get lost’ prices always go up, and if there is going to be more money circulating, they will go up even more. It has always been this way and will be like that now. What’s more, this has been happening for a long time; if not, go to any market to see how much the pound of any root vegetable or whatever is, even if the prices are ‘capped.’ On the contrary, what that does is that the products disappear from the stands and appear much more expensive somewhere else.”
For him, at 72 years old, food is today the main cause of unease. His pension will increase from 385 to 1,678 pesos, above the 1,528 pesos estimated by the government as the value of the reference basket of goods and services for the reorganization process. But in practice, he says, “that money is going to slip through my fingers like water” because, with what he expects food prices to rise, “1,500 pesos are going to be practically nothing.” His luck, he says, is that his son sends him “a little money from time to time” from the United States, thanks to which he can buy in state stores in freely convertible currency and get along.
1. The stores in freely convertible currency in practice have become today the only official space for the purchase of a group of products in Cuba and it seems that it will continue to be like this after the start of the monetary reorganization. Photo: Otmaro Rodríguez.
2. Store in freely convertible currency for household appliances and other products in Havana. Photo: Otmaro Rodríguez.
3. People queue at a state bakery in Havana. Photo: Otmaro Rodríguez.
In addition, since he lives alone―with his dog―, he barely spends on electricity and telephone, and his medicines for diabetes and hypertension will continue to be cheap, thanks to the government subsidy for controlled medicines that Alfredo considers is “very fair,” unless, as has already happened to him, “they disappear from the pharmacy and I have to chase after them in the street.”
Sonia, a street vendor, is concerned about the prices not only of the food that she “has a hard time getting in the street,” but also of the raw materials and other items she needs for her work.
“To give you an idea: a pound of peanuts until not so long ago cost 20 pesos and today it’s already 35, and so on,” explains this woman who sells the classic roasted peanuts as well as tablets of ground peanuts. chocolates, candies, popcorn, milk creams, empanadas, and “everything that appears.” She packages some of the products she makes; others, she buys them from a supplier, even from outside Havana, and she gets “just a bit out of them.” And now the suppliers, she points out, have also increased their prices, so she will have to increase hers.
1. Private seller of candy and tidbits in Havana. Photo: Otmaro Rodríguez.
2. Private seller of soft drinks in Havana. Photo: Otmaro Rodríguez.
3. Street food and vegetable sales point in Havana. Photo: Otmaro Rodríguez.
4. Private point of sale of clothes and fabrics in Havana. Photo: Otmaro Rodríguez.
5. Private point of sale of clothes and baby clothes in Havana. Photo: Otmaro Rodríguez.
6. Private points of sale in Havana. Photo: Otmaro Rodríguez.
“The same flour, with the shortage of recent times, today is gold on the black market, and many pastries and cookies only appear in stores in freely convertible currency, and I better not go on,” adds Sonia. “If I were 20 years old, I would get a job in a cafeteria or one of those paladars, which surely also raise prices because only with the electricity bill they’ll have to pay they’ll feel it. But now in my 50s, I have to adapt to whatever and continue selling my odd my things, to help my son and his wife, who work very hard and pay all the bills. They don’t want me to do this, but I’ve never liked being kept, and now, as things look, any input is going to be welcome.”
Yoel, driver of one of the well-known almendrones (old American cars) that picks up passengers through sections in the Cuban capital, goes even further. The car, he says, is not his, so he has to give the owner a part of his income―a figure that he prefers not to disclose, as well as his own earnings―and “the government is sure to control us so we don’t raise prices.” “It’s true that fuel is not going to go up officially, and that the self-employed are going to be given some advantages with taxes, or at least that is what they have said, but what about everything else?”
“I’m not just talking about electricity, which is what everyone complains about, and with good reason,” the man says to OnCuba. “I myself have two ACs at home, which are on almost the whole year with the heat there is in this country. Electricity already costs me a fortune and now I don’t even want to see what will happen. But add the fuel that I have to buy on the black market, the food, which costs a lot, which restaurants are going to cost, because from time to time you have to go and have a few beers to disconnect, and the building materials and labor for whatever you have to do around the house. For that there are no valid government resolutions.”
“Just imagine, all this has caught me making repairs in the bathroom,” he adds, “but I have to continue because I’ve already started. And if they don’t let me raise my prices, we’ll see how we all get through this, because like me there are a lot of people in this business and it’s not my fault that everything else is going to go up.”
1. Although state fuel prices will not rise with the monetary reorganization, many expect the prices of the private taxis and other transportation will. Photo: Otmaro Rodríguez.
2. The Casas de Cambio exchange offices (CADECA) will no longer sell Cuban convertible pesos (CUC) after the start of the monetary reorganization in Cuba. Photo: Otmaro Rodríguez.
3. Banks have become one of the most visited places by Cubans these days. Photo: Otmaro Rodríguez.
4. Banks have become one of the most visited places by Cubans these days. Photo: Otmaro Rodríguez.
5. State transportation will also raise its prices in Cuba with the monetary reorganization. Photo: Otmaro Rodríguez.
6. Automatic teller machines will no longer dispense Cuban convertible pesos (CUC) after the start of the monetary reorganization in Cuba. Photo: Otmaro Rodríguez.
“They are too many things at once, many sums that must be worked out, and in the midst of all the problems and daily situations one does not always have a clear head to understand everything,” says, for her part, Yanexis, a nurse who, among many other things, is concerned about what Yoel and his fellow private taxi drivers will do from January onwards. “If they sit down as they have done many times because of the prices, transportation in this city (Havana) is going to get even more unbearable,” she reflects.
She says she is happy that her salary increases to more than 4,000 pesos, plus what must be added for the night shifts, because, she says, “the truth is that it was necessary.” With this, what her husband, who is a mechanic, earns and the pensions of her retired in-laws, she thinks they can “live with dignity, at least in terms of the basics.” However, she doesn’t stop recognizing that the shortage of food and other products instated today on the island, plus the official and informal prices that will multiply in just days with the monetary reorganization, could make her life more difficult.
“I have a teenage son to whom we give spending money for his things, for his outings with his girlfriend and with his friends. But now even eating a pizza is going to be more expensive,” she reasons, “it’s not just a pair of tennis shoes or pants, and I’m worried that he will neglect school and start inventing, if we can’t give him enough, so I will have to keep my eyes open, more than I already do. But I also have a smaller son, with other needs, shoes, things for school, a toy. Luckily, I’ve kept his older brother’s clothes for him, and the price of the milk from the grocer’s was not raised, although almost everything else in the ration book did.”
“And there’s also the issue of the price for transportation,” she adds, “which I closely suffer because I am from Santiago and my parents and siblings are still there. From what I read, the plane is going to cost more than 1,000 pesos, so forget it, although with how bad this means has been for a while it was no longer worth it and then it has been stopped because of COVID. But bus tickets, although they did not go up that much, cost 255 pesos up to there, and train tickets cost 100 pesos. Multiply that by four and then by two, because there is also the return, and then one cannot arrive empty-handed…. So, you can see how much my holidays are going to cost me. Anyway, that is what’s coming and we’ll have to adapt. There’s no other choice but to work and hope this situation improves. Hopefully and God willing.”