Cuba sets measures to contain impending inflation

HAVANA, Cuba, Dec 17 (ACN) Addressing the Cuban Parliament, Politburo member Marino Murrillo stated the government will take actions to contain the impending inflation resulting from the implementation of the Ordering task in the country from January 1, 2021

Murillo explain the lawmakers that the salaries will grow, as average, 4.9 times as a result of this process and a growth of the retail prices has been planned, 1.6 times, which does not affect the purchasing power of the salary and the electric bill is included in it.

The problem lies in the retail sales of non-state forms of management," he said, "which represent eight percent of total sales, and although there are conditions for price growth in this sector, it should not be more than three times.

He announced that a resolution will soon be issued by the Ministry of Finance and Prices stating that, based on July 2019 prices, governments up to the municipal level will have the power to place limits on self-employed workers.

He recalled that there are no previous experiences in Cuba of exchange rate movements and no history of processes of devaluation of the national currency.

He informed that for the business sector, going from a 1x1 rate to a 1x24 rate means going to a 2,300 percent devaluation of the currency, which is not normal in the world, although it is possible because in the natural persons sector it was already devalued.

This action means a process of inflation and the challenge is to control it so that it does not occur in magnitudes greater than those designed, said Murillo Jorge.

Furthermore, it will be carried out in a context marked by the COVID-19 pandemic, a foreign currency deficit in the country and the intensification of the economic, commercial and financial blockade imposed by the United States.
He pointed out that the first containment of inflationary prices is found in the formation of wholesale values.

He clarified that the macroeconomic numbers give a trend but if someone is vulnerable he will receive attention from social security because this is not shock therapy, and the first solution will be to provide employment to those who are able to work and local governments must seek solutions in this regard.

We are betting that with wage incentives people will work more efficiently to make wages the main source of income for the worker and his or her family's consumption," he said.

The objectives, he said, are to achieve real devaluation, promote greater economic efficiency and move towards a more stable macroeconomic environment in which money fulfills its three functions.

He warned that Cubans must continue to drive the economy administratively until there are better conditions to drive it financially and that it is necessary to achieve a change in relative prices as a result of the devaluation that leads to greater efficiency.

He added that the monetary ordering does not automatically solve all the existing problems, but it is essential to be able to carry out other tasks of greater scope foreseen in the updating of the economic model.

This does not mean that more wealth is already produced, but with what has been designed, the vicious circle between productivity-salary relationship is broken, and among the main objectives is the different redistribution of the resources available in the economy through the gradual reduction of excessive subsidies and undue free payments, said Murillo Jorge.

Congresswoman Meisi Bolaños Weiss, Minister of Finance and Prices, affirmed that price control is something that takes systematics and constancy and that now more than before it takes a preponderant role.

The main confrontation is the one achieved by the local authorities with the people in the establishments, in the neighborhoods, she said, while recalling that there is a regulation for that.