Cuban Economists predict an inflationary bomb in Cuba during 2024

Economistas vaticinan una bomba inflacionaria en Cuba durante el 2024

HAVANA, February 25. Cuban economists agreed that the new measures announced by the regime to “put the country’s economy back on track”They will generate a new inflationary wave that is already perceived in some areas, such as the increase in the price of currencies in the informal market.

Interviewed by Reuters, they said that the measures, which include price and tax increases, as well as cuts in subsidies, could reveal inflation of between 400 and 500%, considered economist Omar Everleny.

He said that “in economics, prices are not taken in one area without affecting others”; and that “nowhere do I see an emphasis on increasing manufacturing or agriculture.”

The regime argues that these proposed adjustments “will curb a growing budget deficit that is expected to exceed 18% of the Gross Domestic Product and set the stage for growth.”

Pavel Vidal, an economist former employee of the Central Bank of Cuba and currently a professor at a university in Colombia, agrees that “the adjustment of prices (…) and other public services are necessary measures to correct the fiscal deficit”; But he affirms that it is also necessary to open the economy dominated by the state company more to private companies and investments.

This boost to private investments would boost production and the tax base, while state-owned companies are reformed, they noted.

For his part, economist Óscar Fernández, from the University of Havana, was blunt and said that “the new measures” are an “inflationary bomb.”

The economist, a small business owner, said the government should relax rules for the private sector and close bankrupt state-owned companies that are weighing on the local economy.

One of the first measures that the regime will implement will be the almost five-fold increase in the price of gasoline starting February 1.

Some local economists told Reuters that less visible government price increases, such as wholesale fuel, freight transportation, and sales and import taxes, will lead to increases in most products and services at the retail level.

Luis Moreno, a taxi driver from Havana with 14 years of work, commented that he has no choice but to continue raising his rates: “It’s not just the fuel, it’s the food, it’s that everything is very expensive,” he said.

Cuba closed 2022 with an inflation of 30% compared to 38% in 2022, the Government acknowledged; and many economists consider that these rates are far from reality, and marked by an informal market that sells foreign currency at a higher price than the state.

After the announcement of the measures, the dollar has reached record levels on the black market.

Despite these predictions, Economy Minister Alejandro Gil assured in December that inflation is slowing down on the island, and Cubans responded that he is maliciously manipulating figures.

“Although inflation is slowing down. The gap between prices-salaries-pensions and income in general, coming from work, continues as one of the main unresolved problems that must be faced with more production, efficiency and control,” posted the unpopular regime official, who promised a better year for Cubans without managing to improve any indicator.

Days before, during the VII Plenary Session of the Central Committee of the PCC, the Cuban regime recognized the failure of the so-called “ordering task” and announced a new course in its economic policy that would be marked by the increase in prices of basic services such as water, electricity, gas, and fuels.