Cuba: Putting on the Boots

By Randy Alonso Falcón on July 3, 2022

It is a dilemma for Cubans to make ends meet. Wages are not enough to face the very high prices that the lack of offers, real inflation and speculation bequeath to us.

What we know well at the household level, we sometimes fail to understand at the level of the larger dwelling that is the country. Even at that scale, finances are not enough for everything we aspire to and especially for what we need.

As the heads of the nuclei in each household, the leadership of the country has to draw up accounts and more accounts of how it is going to solve the most urgent needs and define priorities in the midst of all that is lacking.

Drawing up accounts every day at pencil point to know how to acquire food, fuel, medicines, spare parts, raw materials, services and other things that are required is not an easy task.

Especially because these accounts must be drawn for the needs of 11 million Cubans. Where others solve with satisfying the elites, and the rest…we already know, the socialist state has to look for solutions for all or for the majorities.

Add to these additions and subtractions the money to pay what we can of the debts we have and the obligations of the contracts signed. And in this world, if you don’t pay, nobody will sell you or give you credit again. Even less in the midst of such a complicated international economic crisis.

The calculations are becoming more complex after two years of high expenses due to the pandemic and little income from exports of goods or services.

To get an idea of the dimension of our economic challenges: the country’s total foreign currency income for the first quarter of 2022 exceeded 493 million dollars, a figure similar to that achieved in the same period of the previous year, but much lower than what we had before March 2020. However, imports of goods amounted to more than US$2 billion, US$688 million higher than in the same period of 2021.

Such an imbalance between what we take in and what we buy in hard currency implies new debts and more challenges. And it does not mean that more spending equals more goods. Generally, more has been spent to acquire the same or fewer quantities. Inflation is not just here at home; it is now a growing global process.

If the price of oil in June 2021 was at $71 a barrel today it exceeds $118 a barrel. In June 2020 it was around 38 dollars. In other words, in just two years, the country has to spend 80 dollars more for each barrel of oil if it acquires it on the international market. We are not talking about transportation costs or the permanent harassment by the United States against shipping companies that risk transporting fuel to Cuba.

In order to continue to ensure basic foodstuffs for our diet, such as rice and wheat for bread, as well as other components of the standard basic food basket, which is sold to every citizen of the country without distinction, the government and our importing companies not only have to deal with an increasingly restrictive and protectionist market, but also have to pay more money for the same amount of products.

We must remember that guaranteeing a pound of rice for each Cuban means acquiring 5,200 tons of rice. And so on for each product of the standard basic food basket: 5,200 tons to guarantee one pound.

The country needs about 700,000 tons of rice for its consumption, most of which is imported. The trend of rice prices in the world market has been upward in the last five months and already exceeds US$430 per ton. And prices are expected to rise due to increased demand, in the face of insufficient supply and high prices of other basic foodstuffs.

The value of many food commodities, from wheat and other grains to meat and oils, has soared. That has been driven by a number of factors, including rising fertilizer and energy costs over the past year, as well as the Russian-Ukrainian conflict.

The UN food price index shows that prices are 75% above pre-pandemic levels.

In its latest Food Outlook report, the Food and Agriculture Organization (FAO) explained that an additional $49 billion will be spent worldwide on food imports this year due to higher prices.

Chicken, the lifeline of these times, has also seen its prices rise.

Sources from which to obtain the money to meet these rising prices are scarce. In our case, the rise in nickel prices since March, after the beginning of the war in Europe, is remarkable, but it does not compensate the growing liquidity needs of the country.

Tourism, the activity that makes the country’s cash box ring the loudest in terms of fresh money, has given a lift, registering 564,847 visitors up to May, according to data from the National Office of Statistics and Information of Cuba (ONEI). That’s as much, as all the visitors recorded in all of 2021.

But it is nothing comparable to 2017, when already on May 3 of that year 2 million visitors had accumulated in Cuba; or 2018, when the same figure was reached on May 18 .

The sugar harvest was the leanest of this century, marked by low agricultural yields and insufficient technical availability of the industry. Rising sugar prices on the world market would have benefited us had we had a better harvest.

Our income from service exports is also lower than in previous years. And this is not offset by the slight growth in exports of goods in the first four months of the year.

With that less money, we have to do the math to decide how much to buy chicken, oil, cytostatics, parts for thermoelectric plants and agricultural inputs.

Add to this the fact that the U.S. is pursuing to its heart’s content any money that Cuba moves around the world and the banks are more than frightened by the high fines that Washington has imposed on the financial sector for transactions with Cuba. This implies additional efforts to receive export revenues or to make export payments. There are operations that have taken weeks or months because they have not been able to find ways to collect or make payments. And this has been worse since January 2021 when Trump felt like foisting on us the fallacious label of State sponsor of terrorism.

Each day of blockade costs the country about 12 million dollars at current prices. Can you imagine how much more can be done? How much less complicated would the accounts be?

◊ “Can you imagine that every day of the year a different municipality in the country could be given 12 million dollars so that it could invest them in its economic and social development?

◊ “The year, with the generosity of its 365 days (366 this leap 2020) would even allow that amount of money to be given twice in the year to each municipality (we have 168); and there would still be days left to give a third round of 12 million to the 14 provincial capitals and the 15 municipalities of Havana.

◊ “Can you imagine if we injected that financial capacity to what we already have in the plan and what each municipality collects through the territorial contribution?

The most recent accounts of the costs of the blockade for one year put the losses to Cuba in the order of 5,570.3 million dollars. More than twice what we import in food for one year; a figure that multiplies by 10 times what the country can allocate this 2022 for investments in agriculture (more than 13,734 million pesos -around 572 million dollars).

It would be interesting to see a few network opinion-makers and narrow-minded theoreticians put on their boots and battle with insufficient finances, a resurgent blockade, unexpected climatic variables, world inflation and battered logistic chains to guarantee the needs of an entire people.

To lead in times of crisis, one must be decisive, be creative, summon collective intelligence, use science. You have to walk all the time with your boots on and with a clear compass. That is what the Cuban government is devoted to; although it is not always accompanied by enough businessmen, intermediate or grassroots leaders, officials.

Dealing with a blocked economy, without sufficient sources of fresh money and with accumulated problems is a real exercise of tenacity and thought. Liberal economics would easily solve the dilemma leaving many out of the saving equation. Socialism should and must think of everyone. Hence, we should meditate more on our steps and we have less room for mistakes.

Source: Cuba en Resumen