Why the New Economic Program Won’t Solve Cuba’s Crisis
Several Cuban economists explain why
HAVANA TIMES – The Cuban government’s new economic program promises to correct the “distortions” that are suffocating the country. However, it begins by admitting that it cannot solve one of the deepest ones: the currency crisis.
From 2020 to 2025, the Cuban economy has been going through one of its worst recessive cycles in decades. GDP has not grown since 2022, annual inflation exceeds 15% according to official data, and the national currency has depreciated almost twentyfold against the US dollar since 2019.
The program itself reveals the paradox of its design: it acknowledges that “under current macroeconomic, productive, and institutional conditions, there are no grounds to move in the short term toward a unified exchange rate system” that would solve the country’s economic problems once and for all.
Among its specific objectives, it also “proposes implementing a new mechanism for the management, control, and allocation of foreign currency for all economic actors” and to “advance partial dollarization within approved limits.”
The Vicious Circle That Strangles the Cuban Economy
In an interview with El Toque, Cuban economist Pavel Vidal, professor at Javeriana University of Cali, Colombia noted that the program at least recognizes “the connection between inflation, the fiscal deficit, and monetary issuance,” something that for years was ignored in Cuba’s economic policy.
“It’s understood that to reduce inflation, it’s necessary to decrease the fiscal deficit and its monetization,” he added.
However, he warned that the proposed adjustment falls short and could prove counterproductive.
“The fiscal deficit adjustment focuses mainly on cutting expenses —elimination of subsidies, increased taxes, and controlled prices— without accompanying it with structural reforms that would stimulate economic growth. Without deep changes in the current model, the possibilities of sustainably recovering fiscal revenues are limited,” he said.
According to Vidal, the result will be an adjustment with a high social cost “because it falls too heavily on the real contraction of household incomes, without creating new spaces and opportunities for the private sector and for wealth generation outside the state.”
The program also calls for continuing “the partial dollarization of the economy within approved limits,” ordering “operations, lawful sources of income, and authorized internal transactions in foreign currency.”
However, Vidal says recognizing dollarization is not enough; transparent mechanisms are needed.
“Although the document again mentions the implementation of a new mechanism for managing, controlling, and allocating foreign currency, it does not clearly detail how it will work. This lack of precision raises doubts about the practical feasibility, sequencing, and scope of this transformation.”
The economist also points to a structural obstacle that no official document addresses: the role of the military conglomerate GAESA in macroeconomic stabilization.
“GAESA controls around 40% of the economy; however, it pays no taxes and does not contribute to the state budget. This means that the remaining 60% of the economy —households and enterprises not linked to GAESA— will have to shoulder most of the fiscal adjustment asymmetrically.”
That asymmetry, Vidal warns, also affects monetary policy because “as long as international reserves remain under the control of military institutions rather than the Central Bank, it will be impossible to guarantee the convertibility and stability of the national currency and the proper functioning of the financial system.”
Without Political Reform, Stagnation Will Persist
Another Cuban economist, Mauricio De Miranda Parrondo, agrees with Vidal that the currency crisis has institutional roots.
In his analysis of the government’s program, published on his Facebook page, he noted that the regime’s acknowledgment that the Cuban economy lacks the conditions to move toward a unified exchange rate system amounts to an admission of immobility.
“Is this a program to correct distortions that cannot eliminate one of the gravest distortions in our economy? (…) Saying this is like telling us to tighten our belts because ‘the house will stay exactly the same.’”
De Miranda maintains that the root of the problem is political: “Yes, it must be solved under the current conditions. Both the monetary and exchange problems and the institutional blockade against the essential changes our society and economy need”.
Economist Pedro Monreal highlights another fundamental gap in the program: financing.
“The program does not identify the resources that would be available to implement the proposed actions (…) An economic program is not credible without identifying the financing that supports it,” he wrote on Facebook.
For his part, economist Julio Carranza, a professor at the University of Havana, considers the program “somewhat disjointed and incoherent, repeating proven ineffective formulas and leaving out many essential factors.”
The Cuban government’s new economic program is not a roadmap toward stability but rather an attempt to manage the crisis without dismantling its causes.
Without institutional reforms, without citizen control over the nation’s resources, and without a model that rewards and supports productivity, the Cuban economy will remain trapped in the same formula: adjusting to survive, not to grow.
First published in Spanish by El Toque and translated and posted in English by Havana Times.