New Cuban Economic Measures Raise Prices On Island
Facing a dire and deepening economic and humanitarian crisis, the Cuban government last week began implementing drastic economic measures to cut subsidies and increase taxes and tariffs to obtain revenue needed to stem spreading shortages of basic goods on the island. The new year began with the government levying new tax increases on private sector companies, steep increases in the price of gas as well as new tariffs on certain imports, including cigarettes. In a significant shift, officials said the government would revamp the ration card system—a longstanding symbol of the Cuban revolution—and curtail across-the-board subsidies of basic foodstuffs, instead providing targeted economic for those in need.
Prime Minister Marrero announced a series of price increases and belt-tightening, stringent measures at a special meeting of the National Assembly in late December as part of a “Macro-economic Stabilization Plan.” The measures include increasing transportation and energy prices and the cost of water usage in certain sectors, as well as requiring foreigners to pay for gasoline with foreign currency.
Marrero said the ration card—known as the Libreta—which subsidizes minimal amounts of rice, milk, sugar, eggs and other basic goods, when such goods are actually available in the state stores, would be repurposed. Instead of going to all Cubans, it would be cut back in order to achieve “a fairer and more efficient” food security for vulnerable sectors of the society. “It is not fair that those who have a lot receive the same as those who have very little,” Marrero suggested, acknowledging the growing socio-economic inequities in Cuba. “Today we subsidize the same to an elderly pensioner as to the owner of large private businesses who has a lot of money.”
Cuba is experiencing its worst economic crisis since the “special period” following the collapse of the Soviet Union in the early 1990s. Gross Domestic Product (GDP) of the largely state-run economy contracted by 1 to 2 percent in 2023, authorities said, and the fiscal deficit is close to 19 percent, severely restricting Cuba’s ability to import basic goods. The official inflation rate is pegged at 30 percent. “Cuba's economy—saddled by U.S. sanctions, a tourism shortfall and a lingering pandemic hangover—is nearing collapse,” Reuters recently reported, “with fuel, food and medicine shortages rampant, public transportation scarce and tensions running high.” Recent reports have cited high inflation and food shortages for fueling what many call a humanitarian crisis on the island.
Over the last two years, an estimated half million Cubans, approximately 4 percent of the population, have left for the United States.
Implementation of the Cuban Government’s new economic measures come as the country commemorated the 65th anniversary of the revolution. In a televised speech on January 1, Raúl Castro, now 92 years old, called for “unity” to confront “this economic battle.” “Finding an answer to these difficulties is an unavoidable duty of all Cuban revolutionaries,” he said.
