Budgets, Prices and Economic Control, the Black Hole of the Castro Economy

A Ration store (bodega) located on Valle Street, in Havana. (14ymedio)

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, October 3, 2023 — The Cuban communist state press, with its usual lack of transparency, addressed the issue of the 2023 state budgets that were approved before the highest governing body after the report on the process of implementing the State Budget in 2023 and the accountability of the Minister of Finance and Prices. Let’s see who dares to oppose it.

Therefore, if anyone is waiting for any indication, let them keep waiting. The only thing that has been known in this regard is that the Minister of Finance and Prices, Vladimir Regueiro, recognized “that this is an exercise that complies with the provisions of the Constitution of the Republic and other laws” in reference to the functions of the highest Cuban government body.

This phrase hides a terrifying idea. Perhaps it leads us to think that there have been other occasions when such compliance has not materialized, or, and it’s the same thing, that the leaders of the budgetary area have assumed compliance with aspects not established by the constitution.

Given the lack of evidence, because no one is going to denounce anything that comes out in the political script, the accountability of the Minister of Finance and Prices was basically focused on aspects related to the government management system, based on the science and innovation that Cuban President Díaz-Canel is so pleased with because it is his doctoral thesis. Likewise for the population’s attention to approach that, in general, is practically not to say anything. The price system was also addressed to replace the threat of inflation, which is the most pressing problem.

Accountability also dealt with the management of budget revenues, in absolute free-fall due to economic stagnation; of course, the budget system, the basis of which is unknown; government accounting, another great mystery; the strengthening of accounting, collections and payments; the control and collection of fines; the performance of the Business Wealth Management Organization, attached to the Ministry; as well as human capital and the policy for cadres. Anyway, it is a jumble of issues to cover a record without going directly to the numbers, which is what is really important in these cases.

The obsession with “guidelines” continues to confirm that Cuban communists are more oriented in their economic decisions by ideology than by technical issues

According to the minister, “the organization’s work projections give way to the implementation of several guidelines for the Economic and Social Policy of the Party and the Revolution, as well as other activities closely linked to the development of the country,” but he did not say which ones or how. In other words, the regime remains committed to complying with guidelines whose most prominent result, the Ordering Task,* has been one of the main failures of the economy in recent years. The obsession with “guidelines” continues to confirm that Cuban communists are more oriented in their economic decisions by ideology than by technical issues. That’s how it goes.

Among the work priorities of his department, the Minister of Finance and Prices highlighted those related to the “improvement of planning, budget execution, the articulation of the State Budget with the Economy Plan, the efficiency and effectiveness of public spending, the tariff system, the modernization of the tax system, price policies, regulatory mechanisms and other issues related to the functions of the organization.”

Questions immediately arise. Is the minister aware of the scarce relationship of these priorities, to which he is supposed to devote his time, to the urgent and immediate problems of the Cuban economy? What does the improvement of planning have to do with blackouts? What can the articulation of the budget and the plan do to solve the problem of runaway inflation?

What does the modernization of the tax system have to do with daily food? Enough of this nonsense! Time is running out

One has the impression that this minister, stating his priorities, is completely removed from the day-to-day life of Cubans, in which eating has become an obsession for many, because it is not guaranteed. What does the modernization of the tax system have to do with daily food? Enough of this nonsense! Time is running out.

Minister Regueiro spoke about prices, not inflation, and he said the only thing he could say, recognizing his failure: “The results in that sense are insufficient and require a transformation that allows verification of the effectiveness of the prices that are agreed and the population’s perception of the effectiveness of the measures.”

Effectiveness of the prices that are agreed? What the hell is this?

Effectiveness of the prices that are agreed? What the hell is this? And even worse, the population should perceive the effectiveness of the measures. Minister, this perception will only be achieved if prices stabilize, and when the CPI in the year-on-year rate grows to 40% on average, stability is very, very far away. What game is the minister playing at?

With regard to the management of budgetary revenues, in free fall due to the situation of economic stagnation, he could only recognize that “the measures that are implemented do not yet have the desired effect, since not all income reserves are captured, nor are tax debts managed to the maximum.” Isn’t it rather that the economy is in the terminal phase and that the tax bases are completely dead and don’t allow income to be obtained? Why isn’t the truth recognized?

No, because the Castroists always blame others for their failures, and the Minister of Finance and Prices says that little is collected because “it has not been possible to reverse the marked trend of under-declaration and evasion of income, which constitute one of the main indisciplines that affects municipal budgets.” Now that they have decided to ban the departure from the country of those who are in debt with the Treasury, they have given the definitive turn of the screw to suffocate the few survivors.

It’s not surprising that the government report on the exercise points out that the issue “associated with prices, must be addressed in greater depth, since the population does not appreciate in that sense the regulatory role of the State.” And for greater emphasis, “it is necessary to define concrete indicators, which allow us to measure what has been achieved in terms of price reduction.”

And of course, the aforementioned document, instead of recognizing the damage that the regime is doing to private initiative and to what extent its possibilities for development are slowed down by public policies, refers to the need to “increase the demand and control over the State Budget Law and work for the gradual reduction of the deficit, guarantee more effective methods of price regulation and control, improve the management of tax collections and increase the confrontation with non-compliance and evasive behaviors, as well as strengthen the role of the technical advisory board.”

Díaz-Canel said at the end of the session that the fight must continue in the face of the difficulties that exist in the economic and social order, with the certainty that the obstacles can be overcome, and he ended up recognizing that “we are missing many things; we cannot be satisfied with what we have done, but throughout the country the fight is going on; work is being done; initiatives are being sought.”

Until when and how? Even Díaz-Canel doesn’t know, but you can move from one lost fight to another without a solution of continuity, and this is what may be happening right now in Cuba. While Díaz-Canel, increasingly distant from reality, thinks about exploiting “all the territorial potentialities, reviewing methods and styles of work and, together with the workers, the producers and the people, finding the solutions to all these difficulties that we face,” the desperate people, standing in line at the ration store for the standard family basket, lost any illusions long ago. Hope is what drives any revolution. They should know that.

*Translator’s note: The Ordering Task is a collection of measures that include eliminating the Cuban Convertible Peso (CUC), leaving the Cuban peso (CUP) as the only national currency, raising prices, raising salaries (but not as much as prices), opening stores that take payment only in hard currency, which must be in the form of specially issued pre-paid debit cards, and a broad range of other measures targeted to different elements of the Cuban economy. 

Translated by Regina Anavy


COLLABORATE WITH OUR WORKThe 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.