At least since 2011, when the Communist Party approved the ‘Economic and Social Policy Guidelines’, Cuba has been immersed in a profound economic reform. In 2021 a fundamental step was taken with the launch of the so-called ‘Ordering Task’ (Tarea Ordenamiento) that involves monetary unification and, among others, price readjustments, increases in salaries and pensions, as well as the expansion of activities authorized to be carried out on self employment basis. After a quarter of application and in a critical scenario aggravated by the pandemic, the measures do not seem to give the expected results. Inflation, shortages of basic goods and a fall in the economy are the most alarming indicators. The graph below illustrated the extent to which the economy has been affected.

José Antonio Alonso (Universidad Complutense de Madrid), Tamarys Bahamonde (University of Delaware) and Ricardo Torres (Centro de Estudios de la Economia Cubana) discussed the main outcomes of the Cuban economical reform and the challenges faced by the country in an event moderated by AHCD Research Fellow Yanina Welp and Johanna Cilano (GAPAC).

Alonso presented an overview of the situations stressing that any economic reform needs institutional reform. According to him, the formal institutional framework has turned out to be particularly rigid and restrictive: while formal institutions are characterized by great inertia and stickiness and are rarely changeable (except in minor aspects), the informal framework appears highly fluid and contingent. The three experts agreed on qualifying the process of economic reform as partial, fragmented, and incomplete. Alonso is convinced on the inevitability of this reform, given the external and internal pressure for change, and the lack of external support (as received in the past by Venezuela, for instance). They also agreed on defining the current scenario as critical. The key threats come from (i) the impact of devaluation on inflation; (ii) the negative consequences of devaluation on imports, (iii) the growing fiscal deficit and debt, and (iv) the increasing inequality. Torres said that the big elephant in the room is the state enterprise, which needs to be seriously reformed. For Bahamonde, a key dimension is a social policy in a permanent crisis producing an increasing crisis of legitimacy. All the experts agreed on the connection between the economic reform and the resistance to change the political institutions. For how long and at what cost society will resist it?

The webinar was part of the project Europe Cuba forum. In the context of this project, José Antonio Alonso has recently edited the book Cooperation between the EU and Cuba for economic and productive reforms. The challenges of economic reform in Cuba, where several experts analyze the current process of redefinition of Cuba’s economic model