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The Cuban economist Pedro Monreal published on Thursday a critical analysis of the recently approved Decree 127/2025, which reorganizes the functioning of budgeted units in Cuba, on his X account, and warned that the regulation may have a limited impact on the country's economy.
In his post, Monreal was straightforward: "Decree 127 regarding budgeted institutions and complementary regulations reaffirms the conservative (not just gradual) approach of 'perfectioning', which could have a modest effect on reducing expenditure, and assumes the poorly performing state enterprise as its archetype."
The economist's assessment contrasts with the official optimism.
Berta Iris Rojas Gatorno, Director of Financial Policies at the Ministry of Finance and Prices, described the measure as "high impact" and assured that "stability and equality between the budgeted sector and the state enterprise sector" are being achieved.
The decree was published on Wednesday in the Official Gazette of Cuba (No. 32 Ordinary) and was approved by the Council of Ministers along with complementary resolutions from the ministries of Finance and Prices, Labor and Social Security, and Economy and Planning.
The regulation affects approximately 2,443 budgeted units that account for more than 50% of the active workforce in the Cuban state sector.
Among its main changes, the decree establishes for the first time a formal legal definition for the budgeted sector and grants legal personality to its financial management.
Units with "special treatment" will be able to establish their own salary system based on their performance, aligning them with the state business sector, and they will be able to engage in self-financed activities without requiring funding from the state budget.
Additionally, positions not directly related to the specific activity of each entity must not exceed 30% of the total workforce, and the budget management shifts from the Ministry of Economy and Planning to the Ministry of Finance and Prices.
However, the decree explicitly excludes the health and education sectors —the most populous and least well-paid— from the most significant benefits, which structurally limits its actual impact.
This exclusion is particularly significant given the salary context: in 2025, the average salary in the budgeted sector was around 5,900 pesos, compared to 7,331 pesos in the state-owned enterprise sector, a gap that drives workers to leave for the private sector.
Monreal's criticism follows a consistent pattern. In March 2026, the economist had already questioned Decree-Law 144/2026 regarding alliances between state-owned and private companies, arguing that it created an image of openness without altering the structural foundations of the centralized model.
The macroeconomic landscape intensifies doubts about the real impact of the regulation: the Cuban GDP fell by 5% in 2025, accumulating a contraction of over 15% since 2020, and the government only fulfilled 51% of its economic plans that year.
The Economist Intelligence Unit projects an additional decline of 7.2% of the Cuban GDP in 2026, a figure that contrasts with the 1% growth estimated by the regime itself.
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