The solution to reducing this gap is not to rethink the effectiveness of the Ordinance, but to avoid the “concentration of wealth in a few hands,” he said.
14ymedio, Havana, 19 July 2025 — Cuban President Miguel Díaz-Canel acknowledged this Friday that the dollarization of the island’s economy has led to a “widening” of the “gaps that mark social inequality.” However, far from questioning the effectiveness of a policy that has been plunging citizens deeper into poverty for years, the president justified the situation by calling out “the ferocious enemy persecution,” which has left the country—according to the official narrative—operating “under many risks.” The solution to reducing this inequality, he explained, is not to consider better public and economic policies, but to avoid the “concentration of wealth in a few hands.”
In his closing speech at the National Assembly of People’s Power, the president asserted that giving the dollar a greater presence in daily life was a decision made to “overcome” the effects of the economic crisis, which has resulted in shortages of basic goods and prolonged power outages. “To overcome this situation, we have been forced to partially dollarize the economy, which has, in some ways, benefited those with certain resources and capital and those who receive remittances,” he stated.
Therefore, he proposes, the State’s capacity to redistribute resources must be improved. According to Díaz-Canel, compared to the previous year 2024, and so far in 2025, the State has achieved that goal: ensuring that companies, especially private ones, pay their taxes in full.
“We closed 2023 with a 35% increase in the fiscal deficit. Many will remember the alarm this caused (…). A year and a half later, the encouraging news is that we were able to achieve a significant reduction. In fact, during the first four months of this year, we had surplus results, and up to this point, the current account has closed without a deficit, something that hadn’t been achieved in more than ten years.”
“Discipline and strictness,” which in practice translate into excessive controls, fines and surveillance of private businesses, were the formula for success.
“Discipline and strictness,” which in practice translate into excessive controls, fines, and surveillance of private businesses, were the formula for success, he said. “This result (…) will allow us to redistribute that income to the most vulnerable sectors, such as our retirees at this time,” he added, referring to the increase in pensions. State aid will increase from 1,528 Cuban pesos (about $12.70 at the official exchange rate) to 3,056 pesos ($25.40), a figure that, although double the current amount, is barely enough to buy two bags of powdered milk on the informal market.
The president also emphasized the importance of gaining a presence in the international market, which will attract much-needed foreign currency to the country. “We cannot remain passive (…). We must focus on all our export capabilities, which inevitably stem from an increase in production in every sector possible (…) that will then allow us to prevail against the global siege and competition.”
The island needs foreign currency to import everything from fuel to power its electrical system to a large portion of its basic food basket. Its dependence on imports means the lack of hard currency is felt in every aspect of Cubans’ daily lives, from the lack of electricity to the inability to purchase the most basic items.
This is the first time that Díaz-Canel has directly referred to the increase in inequality marked by access to foreign currency and the depreciation of the national currency.
This is the first time Díaz-Canel has directly referred to the growing inequality marked by access to foreign currency and the depreciation of the national currency. The Gini coefficient, the main indicator of social inequality, has moved from 0.25 in 1989, out of a maximum of 1, to between 0.4 and 0.5 today, according to conservative official estimates, which would place Cuba among the average of Latin American countries.
In the last five years, Cuba’s GDP has fallen by 11%, a collapse that the government attributes—like everything else—to the US embargo, in addition to the effects of the pandemic. However, much of the food the country purchases comes from the United States. From January to May 2025, the island’s purchases from Washington amounted to more than $205 million, 16.6% more than the same period last year.
For his part, in a harangue, Raúl Castro rose from his chair this Friday and shouted several slogans before the National Assembly. “Long live Díaz-Canel!” “Long live the Revolution!” exclaimed the 94-year-old former president. The chorus of unanimous responses from the deputies was immediate. With their fists raised, the closest parliamentarians echoed the shouts of Castro, who was dressed in full military uniform.
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