Economist criticizes price cap in Cuba: "Forces private companies to adopt the Soviet method."

The renowned Cuban economist Pedro Monreal analyzed the possible consequences of implementing price caps on six high-demand essential products through a resolution published this Monday in the Official Gazette of Cuba.

According to the expert, Resolution 225/2024 from the Ministry of Finance and Prices "instead of using the market to make 'the plan' more flexible, they numb the market with the plan".

"It is not only about insisting on the ineffective "price caps," traditionally applied to agricultural products, but also about forcing national private companies to adopt the Soviet method of price formation," Monreal pointed out on his X profile.

For the specialist, "insisting on a bureaucratic "economic calculation" process to arrive at the most effective combination of resources at the level of the entire economy, instead of one based on market prices, is a serious mistake."

He also asserts that "centralized planning is much more than a doctrine about an economic regulation approach or ownership of assets," which reflects "intervention in multiple dimensions of social life, dictated by a 'vanguard' party."

According to the economist, "the potential reform of state-owned enterprises in Cuba ignores the historical evidence that the 'economic calculation' of centralized planning was not sustainable in the long term. It is absurd to hitch the emerging private sector to that losing bandwagon."

In the long term, the path is shaping up similarly to what was assumed in the "ordering," which was a complete economic failure.

The recent experience of the "reorganization" indicates that skepticism regarding the grand visions in which bureaucracy self-assigns systemic regulation efficiency and effectiveness capabilities it has never proven to possess in the long run is justifiable," he concluded.

Monreal's warning had been anticipated in recent days by actors from small and medium-sized private Cuban companies, who held a tense meeting with Cuba's Deputy Minister of Finance and Prices, Lourdes Rodríguez Ruiz.

A recording obtained by the independent media outlet elTOQUE allowed to detect the atmosphere of tension in which the meeting took place, with critical interventions from the "new economic actors" and expressions of discontent with the government's policies to contain inflation.

"If they want essential products to continue coming in, this is not the way," warned an entrepreneur about the decision to cap prices of six basic products sold by the private sector. "I am not going to transfer the uncertainty to the foreign supplier," he argued.

The recording published exclusively byelTOQUEIt registered the discontent of entrepreneurs, the confusion of the authorities, and other important information not recognized or assumed previously by the Cuban government, such as the fact that inflation in 2024 maintains a trend similar to that of the year 2023, despite all the "measures" and "efforts."