In Cuba, the government has just announced the reestablishment of a floating exchange rate for the peso. A new attempt for the communist regime in power for 65 years to get the island out of the economic crisis in which it is sinking. Very high inflation weighs particularly heavily on the daily lives of Cubans…
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Over a year, prices increased by almost 30% in October; it is certainly less worse than in 2021 when inflation reached 70%, but it remains very worrying. Cuba is experiencing a “war economy” scenariodeclared Mildrey Granadillo de la Torre, First Deputy Minister of Economy and Planning, last July. Inflation fueled by the gap between the official exchange rate set at 120 pesos for the dollar and the reality of the informal market where it takes 320 pesos to obtain a dollar.
This is a new reality for Cubans. Since the implementation of a monetary reform and the opening of certain sectors to private actors in 2021, the Cuban peso has suffered from a very strong depreciation, with the emergence of a parallel market which has favored inflation galloping, a phenomenon hitherto unknown to Cubans in a context of a centralized state economy.
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Reforms that are far from having come out Cuba economic slump also Prime Minister Manuel Marrero explained to parliamentarians on Wednesday that it was necessary to let the exchange rate vary according to supply and demand, while specifying that this would be done progressive manner.
Cuba is going through its worst economic crisis in thirty years. Under American embargo since 1962, the country is struggling to revive its economy, under the combined effects of structural weaknesses, the strengthening of American sanctions, and most recently three natural disasters (two hurricanes and an earthquake). A crisis which is pushing more and more Cubans into exile: the island’s population fell below 10 million last July.
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