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About the Roundtable on the partial dollarization of the economy (+Español)
The interventions in [Cuba’s] Round Table [TV program] yesterday, January 29, 2025, on the partial dollarization of the economy, lead us once again to insist on concepts that we have been expounding for years.
The Cuban economy urgently needs (it is already difficult to say whether there is time or not; we must consider that there is) a fundamental and comprehensive restructuring; any measure taken outside this framework is ineffective. At most, it solves specific issues in the short term but accentuates the problems and entanglements in the medium and long term. This is what has happened with the monetary order, banking, and partial dollarization. All of these would certainly be issues that should be considered, not as patches, but as parts of a comprehensive and well-founded design of reforms.
The reorganization was the most ambitious of all these measures, but precisely the lack of sequentiality and simultaneity with other essential transformations, the failure to define a productive strategy, the unrealistic premises, the lack of material reserves and corrective actions, and the choice of the worst implementation date gave rise to results opposite to those intended. It could be said that it was ultimately based on total improvisation despite the fact that, as stated, years were spent designing it.
It is not only, or essentially, about correcting distortions (many of them caused by measures of this type, defended in the past on the same television spaces) and re-boosting the economy; it is about restructuring it comprehensively and profoundly. Without this, we consider that there are no corrections, re-boosting, or possible solutions. Of course, discussions on specific points of the economy are valid and necessary, but understanding them as parts of the whole.
The Cuban economy has lost its growth potential, and this cannot be recovered without a profound rethinking of both the economic model (how to produce) and the economic development strategy (what to produce and for which markets to do it). Economic policy should be consistent with these transformations and their objectives, generating the necessary incentives to produce goods and services; the basis of the economy cannot be rentism.
We have stated, without going into details that have been exposed on other occasions and are in plain sight, that part of this comprehensive project is, obviously, the solution to macroeconomic imbalances, but well connected to structural transformations, whose core must be the reform of the state enterprise, not so that it stops being public, but so that it stops being inefficient, with an overcoming of the bureaucratic planning that suffocates them and the reform of the agricultural production subsystem. At the same time, the integration of the different economic actors, public, cooperative, and private, into adequately regulated markets, including the monetary market and the market for means of production, added to issues of industrial policy, investment policy, monetary policy, fiscal policy, social policy, foreign debt, international reintegration, etc. all this despite and beyond the strong limitations that, without a doubt, are imposed by the blockade, the list and what may come now.
The strategic plan should be urgent, comprehensive, realistic, defined in stages, with clear objectives, well advised, etc., and of course, transparent and discussed with the people. Nothing clear has been said about that, neither yesterday nor before.
Now, here are some specific comments on what was expressed in this Round Table yesterday; it can be said that, in general, they were commonplaces of little substance, nothing new in the strategic sense.
It was assured that the MLC would be respected, but it is not said how, nor is the deposit returned, nor is it recognized in the hard currency stores and where it is recognized there is a shortage, only some food and hygiene products, but it is known that “man does not live by bread alone,” meaning, the needs are not only the basic ones, although of course these are the most important, nor are they resolved today.
Partial dollarization, whose purpose is obviously to recover foreign currency kept in circuits outside the government’s control, raises many concerns and uncertainties. As with previous measures, the savings of thousands of small savers evaporated. As with the maxi-devaluation of the legal system, now, in practice, savings in MLC also evaporate to the same extent that this currency depreciates against foreign currency in the “informal” market. The political costs of all these impacts are enormous, and they affect confidence in government institutions.
On the other hand, referring to the new stores in foreign currency, it was stated that the concession had been made to accept cash payments “for the convenience of customers,” despite the fact that this creates “operational stress,” as if commerce had not consisted precisely of that since ancient times!
In short, we will continue with this essential debate beyond whether it reaches receptive ears or not; it is a duty.