The Cuban State’s Foreign Exchange Reserves Registered a Sharp Drop in Three Years

Headquarters of the Central Bank of Cuba. (Flickr/Maxence)

14ymedio bigger14ymedio, Havana, 18 January 2023 — Cuba’s international reserves have fallen at a dizzying rate, according to information published in recent days about what was until now a state secret. In the absence of data certified by an independent authority, economists estimate that the country’s foreign exchange resources have decreased by between 22% and 64% in just three years.

The news comes from the analysis by the British agency Reuters of extensive articles published by the Government in Cubadebate the first week of the year in which José Luis Rodríguez, former Minister of Economy and currently an advisor to the World Economy Research Center (CIEM), reveals that the reserves went from $11.528 billion in 2019 to just over 9 billion in 2021. The fall is about 2.5 billion, 22% of the reserves in just three years.

To identify both figures and connect them, you must carefully follow the series delivered by the official media, entitled “The Problems of International Insertion of the Cuban Economy through the Years” and published in three parts on January 1, 4 and 6. In the second part, in the penultimate paragraph, Rodríguez reveals that between 2015 and 2018, “it was possible to maintain (…) 11.528 billion USD in international reserves, which would be vital to face the last three years.”

Two days later, in the third part, addressing the economic context that emerged from the pandemic, the current status of those accounts is indicated. “In relation to international reserves, a reduction of $2.55 billion is estimated in two years, which covers only 76.9% of the reduction in current account income.”

An anonymous and “well-connected” Reuters source claims that the Cuban government’s reserves are now at about $8 billion. The agency, however, contacted other Cuban economists living abroad who consider the reality to be even worse.

Pavel Vidal, a former economist at the Cuban Central Bank and currently living in Colombia, does not dare to give figures but affirms that he expected reserves to be “much lower” and opens the possibility that the official numbers will contemplate, in addition to savings, other goods in strong currency.

“If they are talking about money saved by the State, that would be a very broad definition… because companies, commercial banks and non-bank financial institutions can be included and many things can be added. But what the data show is that reserves are shrinking, a bad sign for any country,” he says.

Omar Everleny Pérez, economist and former director of the Center for the Study of the Cuban Economy, who now resides in the United States, agrees that, whatever the detailed data, the important thing is the abrupt fall. “These data show that international reserves have decreased a lot, and that is very serious,” he told Reuters.

Pedro Monreal, an economist living in Cuba, puts on the table another figure, the one estimated by The Economist Unit for 2022, just $4.104 billion, 64.4% less than the reserves of 11.528 billion in 2019 indicated by former Minister Rodríguez.

In its note, Reuters, which tried unsuccessfully to contact official Cuban sources, explains that the regime’s usual argument for exposing its macroeconomic data or doing so with great delay is to prevent the United States from having more information about its finances that would allow it to modulate the embargo at its convenience.

The anonymous source of the agency says that last week, at the monthly meeting of economic aggregates of the members of the European Union in Havana, the data released by Cubadebate were on the agenda, although there was not enough information about how the calculations were made or why they had been disclosed.

“None of my colleagues had information to support Rodríguez’ statement,” he alleges.

The last time the authorities gave reserve data was in 2014, during the debt renegotiations. At that time, Cuba was alleged to have $10 billion that could be slightly increased in the following few years in which, after the thaw and with the cancellations of debt and renewals of payment agreements with other countries, Cuba experienced a relative bonanza.

In 2019, and after the tightening of US sanctions and the Venezuelan crisis, problems began to accumulate for the Government, which stopped payment on its debt to other countries. The pandemic and the war in Ukraine have finished putting Cuban finances in check, and reserves are running out at great speed due to the high cost of imports, especially food for the population.

Coinciding with the dissemination of this data, the official newspaper of the Communist Party, Granma, published on Wednesday an article entitled “Victims, Creditors or Embezzlers of the Wealth of the Nation,” in which it talks about the fall of reserves in the years of the dictatorship of Fulgencio Batista. “On January 1, 1959, Cuba’s gross international reserves, in gold and dollars, were less than 70 million, of the 509 million dollars that existed at the beginning of the decade,” it explains.

The official newspaper takes great care to note that, until 1959, the Cuban peso was on par with the dollar, which made it unnecessary to maintain a high level of currency reserve.

In any case, the purpose of the text is to accuse the United States’ Helms-Burton law of being the instrument to recover “the goods stolen from the people” who in the period of Batista used “the public funds to construct the buildings that the mafia would use for its nest egg and for the benefit of its members.”

Translated by Regina Anavy


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