The Cuban government declares itself in a state of war economy: Extreme measures to confront the crisis

The Cuban government declares itself in a "war economy". The Cuban authorities, unable to disguise the situation any longer, have acknowledged that the economy of the island is similar to a "war economy". In the midst of a crisis that has surpassed the so-called Special Period of the nineties, the government of Miguel Díaz-Canel is implementing a new package of measures aimed at boosting the "stability of the macroeconomy" that the country needs. These changes include budget cuts, a policy of fixed prices, and various regulations and adjustments intended to "correct distortions and reignite the economy during 2024". During a recent meeting of the Council of Ministers, Mildrey Granadillo de la Torre, the First Deputy Minister of Economy and Planning, stated that the measures seek to adjust the 2024 Plan and Budget to the conditions of a "war economy", a term often used in extreme situations, which the authorities are applying to a country that ended 2023 with 30% inflation, a 2% contraction of the economy, and a depreciation of the Cuban currency of over 50% against the dollar and the euro in the informal market. However, after an analysis by Cuban economist Pedro Monreal, he stated that resorting to the term "war economy" would justify greater control by the authorities. According to him, it is used to justify total dominance because now "is when we most need to plan and when we most need to exercise control". The measures, published in the official newspaper Granma, include a reduction "in Budget allocations with the objective of decreasing the fiscal deficit of 2024, based on underexecutions; defining requirements in budgeted activities for the use of approved Budget, and centralizing the approval authority; monthly allocation of financial resources in accordance with actual monthly revenues; calculating the fiscal impact of imports from non-state management forms; granting tariff benefits, including exemptions, for the importation of raw materials and supplies for production, as well as finalizing the tax system for e-commerce". The Cuban government will also establish a single pricing policy, "inclusive and on equal terms for all economic entities", including both the state and non-state sectors. It has been reported in various media outlets that products such as chicken, oil, sausages, powdered milk, pasta, and detergent will have maximum selling prices at the so-called Mipymes, a move that would alleviate the discontent that many Cubans have with the high and fluctuating prices of these products in the private sector. Monreal pointed out that "the most striking" aspect of the new measures -- of which the implementation date is still unknown -- was the intention to "postpone or even halt investments that are not essential". He also emphasized that "without investment, there is neither growth nor development, and so far the 'essential' investments have been in tourism. Will they continue?" he wonders. These measures, according to a widespread interpretation, could not only increase state control in the country but also create discontent in the state sector if they feel too limited in their businesses. During the meeting, President Miguel Díaz-Canel stated that the country is facing "economic complexities" that are affecting the timely delivery of food rations that each Cuban household receives through the ration book, the frequent power outages lasting several hours throughout the island, and even the inflation that is currently affecting families' access to essential products. The president insisted that the causes of this situation are often "directly related to bureaucracy and the inefficient control that we are conducting from our institutional system". The announcement of these measures has generated uncertainty and concern among the Cuban population, who are already facing difficulties in accessing basic food and other essential products. The country's economic stability is threatened by a series of factors, including a shortage of foreign currencies and a lack of investment in key sectors of the economy. The decision to declare a "war economy" reflects the seriousness of the situation and the urgent need to take drastic measures to try to reverse the crisis. However, many experts and analysts question the effectiveness of the measures proposed by the Cuban government and warn that they could have negative long-term consequences. The centralization of economic control and the restriction of investment in non-priority sectors could limit economic growth and job creation in the country. Additionally, the imposition of maximum prices on certain products could lead to market shortages and the emergence of a black market. In this context, it is essential for the Cuban government to take into account the opinions and concerns of the population and economic experts in order to design policies that are effective and sustainable over time. The current situation requires a comprehensive approach that addresses the structural causes of the economic crisis and promotes transparency and participation of all stakeholders in finding solutions. Only through dialogue and collaboration can the current crisis be overcome and the foundation laid for sustainable economic and social development in Cuba.