Economic Development

Cuba’s Plan to Deal With the Effects of COVID-19 on its Economy – Part I

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The effects of the COVID-19 pandemic on the world economy have been devastating and Cuba is no exception. The country has one surprising and significant advantage though: more than 60 years of experience dealing the challenges of an economy crippled by brutal sanctions as well as the economic collapse of its former socialist trade partners. Drawing on this knowledge gained through decades of lived experience, along with its observation of destructive policies attempted in other Latin American countries, the Cuban government has designed a contingency plan for alleviating the impact of COVID on its own economy.

The strategy, like all others pursued by the Cuban government is defined by a series of actions and decision-making directed at a particular situation for a pre-determined period of time. The country had already embarked upon a process of economic realignment but the new adjustments are clearly time-sensitive, given the current situation, and are mostly operative or tactical.

Conditions matter. Even before COVID-19, the economic, financial and media blockade against Cuba had intensified. The arrival of the virus however, created a precarious health situation that continues to demand enormous resources while the country’s means of generating those resources are practically paralyzed. The world economy has been similarly stricken, complicating Cuba’s already restricted trade opportunities even further.

The implementation of changes demanded by the Cuban people in public consultation and discussion remains a key objective now within the context of global crisis.

Another key objective is defeating the economic blockade imposed by the United States, and finally, the country is dedicated to the preservation of socialism, seeing it as the only path leading to prosperity with social justice.

What goes around comes around and in a way, the old strategy is new again. It targets the 16 key areas of the country’s economy and includes the participation of both public and private production. The strengthening of self-employment and non-state means of production are priorities for the Cuban government, through the establishment of ground rules for micro, small and medium sized businesses in both the private and public sector. The path to this kind of business environment does not place limits on the creation of large businesses, including those funded with foreign capital.

These new economic plan follows nine general guidelines:

  1. Maintenance of central planning.
  2. Defense of Cuban production, discarding the importation mentality.
  3. Market regulation, mainly through indirect means.
  4. Linkage between various economic actors, both in the state and private sector.
  5. The dynamic role of internal demand.
  6. Greater management autonomy in the business sector; something widely insisted upon by the Cuban people and the managers themselves.
  7. Implementation of key aspects both approved and pending, in the updating of management methods and property ownership.
  8. Providing incentives for competition, guaranteeing the efficient use of material and financial resources as well as their conservation.
  9. Respecting environmental policies and sustainable development.

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In Part II we will discuss more….

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