Cuban Minister of Economy, Joaquín Alonso Vázquez, confirmed this Monday that the Cuban economy declined by almost 2% (1.9%) at the end of 2023, despite the government's expectation for it to grow by 3%. The forecasts for this year are not promising.

According to Cubadebate, Alonso Vázquez explained in the Economic Affairs Committee of the National Assembly that this year "the complex scenario" persists, marked by a high fiscal deficit and "monetary issuances above the recommended level". Something similar to the previous year, which forced the Government itself to admit last December that its growth forecasts were falling short. However, they never admitted a decline in the GDP and spoke constantly of "stagnation".

The minister did not say anything that was not already known before being exposed in the parliamentary seat, where he spoke about "insufficient" earnings in foreign currency and low recovery of national production. In addition to that, there are "limitations with fuel and energy," "high and persistent inflation," and "high external debt" that must be added to the situation.

To put it simply, all Cuba has is debt, scarcity, and a lot of money in circulation, aggravated by the fact that the Government does not control the exchange rate and therefore cannot lower the inflation rate, which by the end of May had risen by 31% year-on-year, as reported by the Deputy Minister of Finance and Prices, Lourdes Rodríguez Ruiz, in a recent meeting with representatives of small and medium-sized enterprises, to whom she announced the Government's decision to cap the prices of six basic products in the Cuban consumption ranking: chicken, soybean oil, detergent, sausages, pasta, and powdered milk.

Right on inflation, the minister said that although there are signs of deceleration in 2023, it resists dropping below the 30% environment, which means that prices keep rising, although at a slower pace than they could.

In the jargon of the Communist Party, Alonso Vázquez pointed out that at the moment there are "insufficient productive linkages between actors in the economy." In other words, the disconnect between state-owned enterprises and the private sector persists.

Among the bad news that the Ministry of Economy has brought to the National Assembly is the failure to meet the established income plan, although it ensures that what has been earned this year exceeds last year's earnings. In this way, $222 million USD less has been collected this year, but compared to 2023, $249 million more has been earned. Cubadebate does not explain what the income target is in order to know how far short of the expected target has the achieved amount fallen.

"Favorable" export of medical services

According to the Minister of Economy, a "favorable" trend is observed in the export of medical services, tobacco, charcoal, elver and lobster, and biopharmaceutical products, but the expected revenues are not being achieved from the external sale of nickel, sugar, rum, honey, sea shrimp, tourist services, and telecommunications. Additionally, "poor management" in the collection of invoices abroad is also influencing this point, accumulating a 6.4% delinquency rate in the first half of this year.

Essentially, the tourism industry in Cuba is not recovering, and although there has been a slight increase (1.8%) in tourist arrivals this year compared to 2023, the country is still at 51.6% of pre-pandemic figures from 2019. The main source markets for visitors are Canada, Russia, Cuban residents abroad, and Germany, in that order.

Regarding imports, only 58% have been fulfilled, despite prioritizing the purchase of food, medicine, fuel, and medical supplies, which are clearly insufficient considering the scarcity of food and the poor state of healthcare in Cuba.

An interesting piece of information provided by the minister is that private sector imports amounted to 900 billion dollars, of which the majority (622 billion USD) corresponds to SMEs.

It is also astonishing that in the entire semester, only 12 new foreign investment projects have been approved, a very discreet number in a globalized world and a virgin market like Cuba. Of those, only one has gone to the Mariel Special Development Zone, which was expected to become the country's largest investment attraction pole.

As can be seen from street level, the minister confirmed that the majority of agricultural productions have been unfulfilled due to a scarcity of fertilizers, pesticides, fungicides, fuels, and animal feed.

Risks and challenges of the electrical system

Minister Joaquín Alonso Vázquez also pointed out what nobody would want to hear on the streets of Cuba: that the national electrical system is facing "risks and challenges" due to a lack of fuel. This translates into more and more blackouts, and the only proposal heard to mitigate it is the construction of solar energy projects to reach 2,000 MW and the maintenance of thermoelectric plants, but Cubadebate does not provide details on this.

Ulises Guilarte de Nacimiento, the union leader of the Workers' Central of Cuba, stated that the second half of the year will be "complex" and warned that there are still state-owned companies in the red in key sectors such as agriculture, sugarcane, and the food industries.

In general, the debate focused on stating what everyone knows: that there are serious problems of food and fuel shortages, but no solutions were proposed. There were some interesting warnings, such as the one made by Jorge Luis Broche Lorenzo, a member of the Communist Party's Central Committee, who spoke of the "excessive payment" by the state sector to the private sector.

The Cuban economy fell below the Government's expectations in 2022, growing by 1.8%, a figure well below the 4% projected by the Government at the beginning of that year and lower than the adjusted target of 2% at the end of that period.

In 2022, Cuba's real GDP grew by around 2%, compared to 1.3% in 2021. ECLAC (Economic Commission for Latin America and the Caribbean) expected the Cuban economy to grow by 2% in 2023 and to decline in 2024. However, the reality has been much worse. There is a setback of almost 2% during the past year, and no improvements are expected in this fiscal year.