Pandemic May Be The Push To Open Cuba’s State-Controlled Economy

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People wait to buy products with U.S. dollars at a supermarket in Havana on July 20. Cuba has eliminated a tax on dollars and opened «dollar stores in an attempt to boost the economy.





Adalberto Roque/AFP via Getty Images



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Adalberto Roque/AFP via Getty Images



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Ted Henken of Baruch College in New York, an expert on the Cuban economy, says Cuba’s regime is facing a huge liquidity crisis.

«This is a quick way they can transfer the money that is in the pockets of Cuban citizens and/or their citizens abroad to fill up its empty coffers so it can buy things abroad, he said.

Cuba buys as much as 80% of its food and fuel on international markets, something it can’t do with the Cuban peso.

And fuel is in short supply as Venezuela has cut back on shipments of subsidized oil.

So along with opening hard currency stores and dropping the tax on dollar transactions, senior officials, including Cuba’s vice president and minister of foreign investment, announced measures to ease restrictions on Cuba’s private sector, which had been growing before the pandemic. They promised private businesses greater legal protections and the ability to import and export goods.

Additionally, the government will give private businesses access to wholesale markets.

Richard Feinberg, an economist at the University of California San Diego, called the reforms a move in the right direction.

«However, there are reasons for some skepticism, cautioned Feinberg. «Many of these measures have been announced before several times, so the proof will be in the speed and efficiency and implementation of these measures.

Communist Party leader Raúl Castro proposed similar reforms a decade ago but was stymied by hardliners in the party. Feinberg says Castro’s hand-picked president, Díaz-Canel, may have better luck.

«Of course, there is no transparency, it’s hard to know, said Feinberg, «but perhaps the reformers have gained the upper hand with the support of President Díaz-Canel.

Many Cubans, like computer business owner Liber Puente, are optimistic about the government’s willingness to ease restrictions on the private sector now, because of the worldwide slump.

Puente is struggling after four months of the coronavirus lockdown, but he’s holding on.

«To be alive, breathing and keep operating is a success in Cuba, said Puente by phone from Havana. And he’s hopeful he’ll soon be able to fulfill his dream and actually grow his computer business.