New Economic Strategy in Cuba Is Making Progress

RIO DE JANEIRO, BRAZIL – Two months after the announcement of reforms to address the economic impact of the coronavirus pandemic, the first stages of the program are now being implemented in Cuba. As reported by the Ministry of Foreign Trade (MINCEX), over 700 private businesses and 119 cooperatives are currently in negotiations. The first export contracts to Spain and an agreement with a company from Panama are already underway.

By opening up foreign trade to the private sector, the government hopes to create new export value chains, which should improve the hitherto strongly negative trade balance. After creating regulatory conditions and introducing tax breaks for export companies in the first half of September, the first 40 export and 35 import contracts are now to be signed.

As the “Cubdebate” news website reports, private farmer Lázaro Rafael Fundora Hernández from the Mayabeque province signed the first national contract and is now shipping his limes to Spain. “For years I have been trying to export my goods as a producer,” said Fundora Hernández, who sees the new opportunity as the future development path for his country. The first ton of “Conchita” brand limes is now on its way to the Iberian peninsula, where “an extremely competitive market with high requirements” prevails, says the farmer. Cuban avocados will soon be shipped to Spain from his farm “La Esperanza”.

Most export contracts currently under negotiation are for wood products and charcoal, fresh fruit and vegetables, canned goods, ornamental birds, natural chemicals, honey soap, software and IT services. At present, 37 state-owned companies are authorized to handle private foreign trade, which is open to farmers, self-employed workers, cooperatives and private individuals.

Another new feature is that private companies and cooperatives may now be commissioned by foreign companies. The building cooperative “La Concordia” from Matanzas has already made use of this opportunity and signed a contract with the Panamanian company “Cincuenta Américas Fachadas”. The cooperative has already executed over 300 projects in Matanzas and is now working together with its foreign partner and the state-owned company DINVAI S.A. on the building of “Hotel Oasis” in Varadero.

In a special broadcast, the Ministry of Finance and the Central Bank provided an overview of current developments. The head of the Central Bank, Wilson González, briefly addressed the rumors about the currency reform, which is supposed to be implemented on October 1st, and stressed that details would be announced “in due course”. There is news concerning the import and export of foreign currency. In the future, only US$5,000 may be routinely imported or exported to Cuba in place of the previous US$10,000; larger amounts require special authorization from the customs authorities.

Currently, among the most important challenges in the pandemic is the digitalization of the banking system in order to prevent lines and crowding. Around one million Cubans now use the “Transfermóvil” App to pay for electricity, water, gas and other bills. One in every four transactions in Cuba is currently processed electronically; in 2017, this figure stood at only six percent.

The establishment of an agricultural development bank is expected to boost food production by providing agricultural producers with better access to credit for the purchase of new equipment and seeds. A new law allows private farmers as well as cooperatives, crop harvesters and other seasonal workers to be hired by verbal contracts for up to 90 days with no requirement to hold a license as self-employed workers, as is currently the case. The legally prescribed eight-hour working day may not be exceeded.

At a State Council meeting, three other reform projects were passed, including the introduction of trusts as a form of financing and a new law on mortgages and foreclosures. Private real estate mortgages are intended to play a greater role in Cuba’s economy and serve as collateral for banks, in order to raise initial capital to start a company, for instance. Around 90 percent of Cubans own their apartment or house, which should increase access to credit for families with little foreign currency income or remittances from abroad.

The new economic strategy is to be implemented by the upcoming party congress in April 2021. President Díaz-Canel announced that Parliament would conduct its first interim review in October.

Related coverage: Peru Will Attempt Gradual Reopening of Economy in October · Chile Announces US Billion Package to Help Recovery, Create New Jobs · Chile Drops Out of Regional Agreement on Environmental Information Sharing · Juan Guaidó Contests Argentine Government on Venezuela Human Rights Violations

More: Latin America news in English, every day from The Rio Times.

This article was produced by The Rio Times’ automated AI newsroom. Editorial responsibility: Matthias Camenzind, Publisher and Editor-in-Chief. The Rio Times also runs Ask Rio Times, which answers from 100,000+ of our own articles, the daily Latin America Power Map, and prediction-market odds on elections and markets.. How we use AI · Report an error