Havana, Dec 20 (EFE).- The Cuban government on Wednesday announced that in 2024 it would implement one of the biggest macroeconomic adjustment plans in decades, increasing energy prices and eliminating universal subsidies for basic foodstuffs, in order to confront the severe economic crisis it is suffering.
Cuban Prime Minister Manuel Marrero presented the Macroeconomic Stabilization Plan in a surprise appearance before the National Assembly (unicameral parliament) following a speech by President Miguel Díaz-Canel, who described the situation as a «war economy.»
The plan seeks to reduce government spending by raising prices capped by the state and reducing the cost to public coffers of subsidies, moving from a model that subsidizes products to one that economically supports vulnerable groups.
Basic food basket
Marrero explained that the goal is to achieve «a fairer and more efficient system» to «leave no one behind,» tacitly acknowledging the growing social and economic inequalities in the socialist country.
«It is not fair that those who have a lot receive the same as those who have very little. Today, we subsidize an old pensioner the same way we subsidize the owner of a large private company who has a lot of money,» he argued.
The identification of vulnerable groups based on objective criteria will be entrusted to the Ministry of Labor and Social Security and the process could take months, according to Marrero.
The «waste» in subsidies
The Prime Minister also assured that, given the situation, the State could not continue with the «waste» in certain subsidies, such as water, electricity, liquid gas, transportation and fuels.
Homes that consume the most electricity will see a 25% increase in their tariffs, and tourists will be charged for fuel in foreign currency.
The cost of water will be tripled for those who do not have timed service, and the price of a cylinder of liquid gas will increase by 25%.
Marrero also announced that in 2024 the government will change the official exchange rate of the Cuban peso, or CUP, against the dollar.
Since 2021, the official exchange rate has been 24 CUP to the dollar for companies and 120 CUP for individuals. On the informal market, however, the dollar has risen to 273 CUP.
The prime minister also left the door open to reducing the number of state employees.
Multifaceted crisis
In recent days, in preparation for the ordinary session of the National Assembly, several macroeconomic data have come to light, most of which reveal a negative trend in the Cuban economy. The island is experiencing a multifaceted crisis.
The Cuban government now estimates that gross domestic product will shrink between 1% and 2% in 2023, after forecasting 3% growth earlier this year.
Inflation in the formal market is estimated to end the year at around 30% (informal inflation is much higher), and the deficit will rise to around 15% of GDP after the government acknowledged a 44% overspending.
Meanwhile, the number of tourists visiting the island barely exceeded 2 million, compared to the 3.5 million estimated by the Cuban government at the beginning of the year.
By 2024, the number is expected to reach 3 million, still a far cry from the 4 to 5 million who traveled to the island annually before the pandemic.
Cuba has been in a serious crisis for three years, with shortages of basic products (food, fuel and medicine), galloping inflation, frequent blackouts and partial dollarization of the economy, which has led to unprecedented migration and social discontent. EFE
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