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Cuba sees hints of recovery, announces “audacious” measures to tame inflation -Breaking

© Reuters. FILEPHOTO: In Havana (Cuba), May 16, 2017, cranes decorate the skyline. Picture taken May 16, 2017. REUTERS/Stringer

Nelson Acosta and Dave Sherwood

HAVANA (Reuters) – Cuba´s ailing economy has begun to recover in some sectors after two years of pandemic-induced contraction but soaring global prices for food and fuel require “audacious” measures to tame inflation, economy minister Alejandro Gil told Cuban lawmakers on Saturday.

Gil claimed that Cuba had experienced an increase of 38% in exports over the quarter. The reason was the rise in nickel prices, which are a key mineral export. He stated that inflation has also declined despite the increasing import prices.

Gil stated, “We are starting to see a clear-cut and gradual recovery.”

But the price Cuba paid for imported goods jumped by nearly $700 million in the first quarter, outpacing the country´s modest gains in exports, a predicament Gil attributed to “imported inflation” driven by fast-rising prices for such products as fuel, corn for feeding livestock and wheat.

U.S. sanctions and soaring food and fuel prices, in part due to the Russian invasion of Ukraine, have put Cuba´s tepid recovery at risk and threaten to worsen shortages already forcing citizens to line up for food, medicine and other basic goods. {nL2N2W20F1}

The government has not met its targets for tourism, which is a major source of foreign currency to purchase pricier imports. This complicates recovery.

Gil did not provide figures for overall gross domestic product nor did he address how first-quarter results contributed to meeting the government´s target of 4% growth in 2022.

A major sticking point, Gil said, continues to be Cuba´s unofficial exchange rate, which has ballooned to five times the government rate of 24-1 in recent months, slashing buying power for the average Cuban.

Gil announced that Cuba will start selling foreign currencies at the rate of black market and official rates. But, these deals will only be available to selected state-run businesses and private enterprises in an effort to improve production of high-demand goods.

Economy minister stated that a more favorable currency would help to support production, which could then be sold later on to the public in national currencies.

Gil claimed that people who wish to exchange dollars for pesos will be denied access to the program. But, that the government had been working hard to achieve that goal.

“These are bold, innovative measures. Gil stated that there are not magic solutions to all problems.

Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.