{"id":245455,"date":"2021-11-05T08:27:23","date_gmt":"2021-11-05T12:27:23","guid":{"rendered":"https:\/\/oncubanews.com\/en\/?p=245455"},"modified":"2021-11-05T08:27:23","modified_gmt":"2021-11-05T12:27:23","slug":"how-have-things-been","status":"publish","type":"post","link":"https:\/\/oncubanews.com\/en\/opinion\/columns\/counterbalance\/how-have-things-been\/","title":{"rendered":"How have things been?"},"content":{"rendered":"

I\u2019m going to ask for a difficult exercise, almost impossible: suppose that the country (Cuba) is in a normal situation, that is, with <\/span>blockade<\/span><\/a> plus and without a <\/span>pandemic<\/span><\/a>. I clarify that after sixty years living under the U.S. blockade \u2014 this situation that does not depend on Cuba \u2014 is, for some of us, \u201cnormal\u201d even when in itself and compared to the rest of the world it is tremendously abnormal.<\/span><\/p>\n

So, with a blockade and without a pandemic, the situation in Cuba at the end of 2019 was already quite compromised in macro terms. Remember that just in December of that year COVID-19 appeared. Let\u2019s go to the data from then:<\/span><\/p>\n

\"\"<\/a>
Source: Statistical Yearbook of Cuba, 2019.<\/figcaption><\/figure>\n

Since 2015, the Cuban Gross Domestic Product (GDP) has experienced a sustained downward trend, which ended in negative growth in 2019, and an average of 1.7 for the period, a low one, if we take into account, on the one hand, that those were the years of the boom in U.S. tourism, hotels and private hostels, overflowing with tourists, and on the other hand, that it was a period in which the restructuring of the <\/span>debt with the Paris Club<\/span><\/a> was achieved.<\/span><\/p>\n

Gross capital formation at current prices for that period did not exceed 10.5% of GDP, despite the tremendous constructive effort in the real estate sector. In terms of constant prices, it was 15.4%.<\/span><\/p>\n

Investment in the real estate sector \u2014 practically all made with national capital (state investment) \u2014 reached 10,910,400 pesos, which contrasts with what was invested in agriculture in those same years, 710.3 million, and fisheries, 44.4 million, mining 305.9 million, the sugar industry 606.2 million and the manufacturing industry 1,518,900.<\/span><\/p>\n

Imports of goods and services in the same period stagnated, resulting in 2019 at 87% of those of 2015, while exports of goods and services have declined since 2015 and in 2019 only reached 84% of 2015. Its impact in the current account and in the balance of payments is very negative.<\/span><\/p>\n

The debt servicing accumulated between 2016 and 2019 reached 10.375 million dollars, according to estimates by <\/span>The Economist Intelligent Unit<\/span><\/i>. That represents 18.8% of total exports of goods and services for the 2016-2019 period and 113% of exports of goods for the same period.<\/span><\/p>\n

Meanwhile, in tourism there is a significant growth from 2015 to 2017 (more than one million tourists) but already in 2018 and 2019 the number of tourists decreased progressively to 4,263,115 from 4,593,914 in 2017. The occupancy rate did not reach 50% in all types of facilities and in the \u201cfive-star\u201d hotels it was below 60% since 2017. The income from international tourism saw a decrease of 3 million in 2018 and 2019.<\/span><\/p>\n

Add to this a fiscal deficit of more than 6 billion in 2019 and a sustained monetary growth of the supply from 42.5 billion in 2015 to 106.5 billion in 2019.<\/span><\/p>\n

I have used these data from 2019 to signify that even before the pandemic the situation of the Cuban economy was very difficult and presaged that any adjustment that was intended to be made would put the economy at its limits. But the planned adjustment was not just any adjustment, it was 2,400%. Not many countries have had to make such adjustments under such precarious conditions, without being able to resort to international flows of resources and with a poorly diversified business fabric and a highly deteriorated production system due to lack of investment. In short, an economy with very little room for maneuver, also weighed down by years of inertia and caution in the application of its reform program.<\/span><\/p>\n

When the <\/span>Task of Reorganization<\/span><\/a> was announced in mid-2020, the exchange rate in the informal market had moved from 24 Cuban pesos (CUP) per dollar to more than 35 CUP per dollar.<\/span><\/p>\n

Adjustment policies, all of them, have short-term impacts, generally on decisive variables, and these impacts are almost never positive. Devaluation drives price growth and can lead to inflation. They \u201cadjust\u201d the structure of the economy, by eliminating enterprises that are not efficient in these new conditions and can produce unemployment, except if the industries that are \u201cwinners\u201d in this process generate enough employment to compensate for that which is destroyed or new industries appear, often as a result of fresh capital inflows. These \u201coffsetting\u201d effects, however, generally require more time.<\/span><\/p>\n

Implementing an adjustment policy and pretending not to pay the cost for it seems to be at odds with reality itself.<\/span><\/p>\n

The data for 2020 confirmed what was almost foreseeable in 2019, but made the problems more complex. The \u201cTask of Reorganization\u201d was announced in mid-2020 and was put into practice in January 2021. The results of these first months of 2021 show \u201chow things have been.\u201d<\/span><\/p>\n

In short, things have been as follows:<\/span><\/p>\n