Marc Frank

HAVANA (Reuters] – As the Communist-run Cuba struggles to recover after a severe economic crisis, the government’s report on the weekend stated that a cash deficit and a crippled economy in Cuba would grow 4% next fiscal year.

Prime Minister Manuel Marrero’s annual report (http://media.cubadebate.cu/wp-content/uploads/2021/12/Informe-de-rendici%C3%B3n-de-cuenta-Primer-Ministro.pdf) said the economy began a slow recovery of around 2% this year after declining 10.9% in 2020 and stagnating for several years before that.

The government estimates that the new U.S. sanctions, on top of the trade embargo dating back decades and the pandemic coronavirus, have cost at least $4Billion in revenue to this import-dependent country over the past two years.

Imports fell 40% and the shortfall has hindered government efforts to supply Cubans food, medicine and agricultural inputs. Cuba has defaulted on some payments https://www.reuters.com/world/americas/exclusive-cuba-wealthy-creditors-hope-save-landmark-accord-2021-06-07 to its creditors and suppliers.

The government’s decision to devalue the peso https://www.reuters.com/world/americas/explainer-how-cubas-monetary-reform-will-take-place-impact-economy-2020-12-11 for the first time since Cuban leader Fidel Castro’s 1959 revolution combined with increased dollarization of the economy have sparked triple-digit inflation estimated by local economists at around 500% this year https://www.reuters.com/world/americas/roaring-inflation-compounds-cubans-economic-woes-2021-06-16.

According to a Cuban businessman with many years of market experience, the goal for 4% growth may indicate that Cuba still faces shortages in critical goods and will continue having difficulty paying its creditors.

Marrero stated that the government was preparing steps to reduce inflation and increase the strength of its peso. The informal peso trades at 70 cents per dollar, compared to the 24 pesos official rate.

“A set of measures must be adopted with a view to stopping the inflationary spiral,” Marrero said in his report, without stating what they might be.

Marrero credits a vaccination program that reached 80% population with clearing the path for an upcoming recovery.