Sunday, August 1

Where does the economic crisis in Cuba come from?


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Some analysts attribute the social protests that have shaken Cuba from the 11th to a «cocktail of factors» integrated, among others, by the post-Castro transition in government, the advance of the pandemic and the economic crisis that the country is going through.

Without diminishing the importance of the first two factors, which have it and are the direct responsibility of the government, the economic crisis that the country is going through could give rise to an inaccurate interpretation of what is happening in Cuba.

Because in effect, there is a serious, deep and intense economic crisis that began at the end of 2019 when tourism revenue flexed down fruit of a terrible tourist policy. Some of us also think that the crisis started in 2016, when Venezuela stopped sending the supplies agreed with the Cuban communist regime. Even the crisis caused by the pandemic throughout 2020 left Cuba without foreign exchange due to the simultaneous decline in tourism, foreign investment and exports.

In a way, the country has been in an economic crisis for five years. However, the current one is intense and complex, and its origin in 2021 has to be identified with the application of the so-called Ordinance Task, an «adventure» of the communist regime, perhaps the last one, which has gone frankly wrong.

The economic crisis that Cuba is experiencing, and that has led people to protest in the streets, began on January 1, when the government agreed to start the Ordinance Task with the monetary and exchange unification of the two currencies that had been operating in the Island until then. And not satisfied with this, they applied a series of measures that were not very related to each other, such as a severe reduction in gratuities and subsidies, an increase in wages without reference to productivity, and allowed a certain flexibility in setting prices. The results were felt immediately.

The exchange rate of the Cuban peso against the dollar and the main currencies collapsed, despite the devaluation in the business sector of 2,300% one of the most intense of world economic history. However, exports did not rebound upward, not even those made by private entrepreneurs. Afterwards, inflation appeared, according to some analysts, in the triple digits that dragged down wage earnings, impoverishing the population like never before. Agri-food production collapsed, emptying shops.

The economic crisis has not arisen spontaneously, but rather, in the case of Cuba, it comes as a consequence of the Ordinance Task, which was a communist political and ideological effort to adopt agreements that had to be carried out to congress. Without taking into account the situation, nor the needs of the country. Living conditions hardened, even more so than they were, and people reacted. That easy. This social outbreak had been anticipating since January.

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