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LATIN AMERICA ADVISOR

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

January 12, 2024

Can Cuba Steady its Shaky Economy Through Cutbacks?

Cuba’s economic crisis is requiring the government to implement an economic stabilization program, Prime Minister Manuel Marrero Cruz announced last month. // File Photo: Cuban Government.

Q

  • Cuba’s government announced Monday that it is hiking the price of fuel by 500 percent, a move that takes the cost of a liter of gasoline from 25 pesos ($0.20) to 132 pesos. The fuel price hike followed Prime Minister Manuel Marrero Cruz’s statement on Dec. 22 that the island nation, which is grappling with a severe economic crisis, may also cut rations of food and other basic supplies. How is the public likely to react to the cutbacks? How much of an impact will the policies have on Cuba’s struggling economy? What is the outlook for Cuba’s economy in the year ahead?

A

William M. LeoGrande, professor of government at American University: “The macroeconomic stabilization program unveiled by Prime Minister Marrero Cruz at the December meeting of Cuba’s National Assembly is aimed, first and foremost, at controlling inflation by reducing the government’s fiscal deficit. Pre-Covid, the deficit was running about 8 percent of GDP, but it ballooned to almost 18 percent in 2020, and is projected to be that high again in 2024. The dual shocks of Covid, which closed the tourism industry, and U.S. economic sanctions, intensified by President Trump and continued by President Biden, cut Cuba’s foreign exchange earnings by two-thirds. Reduced imports means shortages of food, fuel, medicine and inputs essential for…”

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