Cuba Proposes Power Shift: Municipalities to Attract Foreign Investment and Manage Foreign Currency

The Cuban government announced a significant shift in power on Thursday, proposing to decentralize authority to municipalities. This move would grant them the ability to export and import goods, manage and retain foreign currency, attract foreign direct investment, and take on larger roles in local economic, financial, and administrative planning.

Unveiled by Prime Minister Manuel Marrero Cruz during the Third Extraordinary Session of the National Assembly of People's Power (ANPP), this initiative is part of a broader set of 176 economic and social reforms.

These proposals, organized into 23 strategic areas, aim to overhaul Cuba's economic and social model amidst the country's ongoing economic crisis. Specifically, Axis 5: Transformations in Municipal Autonomy, highlights the transfer of key powers from central to local governments.

Marrero Cruz outlined that municipalities would take on decentralized roles in strategic planning, land and urban management, food sovereignty, and nutritional security, as well as community services.

The proposal significantly broadens the economic capabilities of local territories.

Municipalities would be empowered to drive local economic development by diversifying their productive landscape, involving both state and non-state actors, including Cubans living domestically and abroad.

Furthermore, they could establish local production systems and manage foreign trade activities.

Among the notable measures is the allowance for municipalities to directly engage in exports and imports, enabling them to generate and retain foreign currency to fund both operating costs and capital investments.

Additionally, they would have the authority to promote and manage foreign direct investment projects within their regions.

Administrative and Resource Management Changes

The decentralization process would also extend to municipal administrative and human resource management, as well as local budgetary, financial, and tax management, granting territorial authorities greater autonomy over their resources and development policies.

Municipal transformations are complemented by other initiatives detailed in the document presented to the ANPP.

Noteworthy among these is the capability for provincial governments and municipal administration councils to create, merge, dissolve, or liquidate local state enterprises and execute other organizational movements within the state enterprise system.

In the agricultural sector, it is proposed to decentralize the use of the Agricultural Development Fund to municipalities, tailoring its use to the characteristics of each area and linking it to projects aimed at boosting food production.

Parliamentary Debate and Concerns

During parliamentary discussions, several deputies expressed support for expanding territorial powers but emphasized the need to strengthen municipal governments' management capacities to handle new responsibilities.

Concerns were also raised about the risks of decentralization without adequate institutional preparation.

Marrero Cruz acknowledged that one of the challenges of this process would be transferring competencies to municipalities without adequate capacities to exercise them.

Nevertheless, he defended the proposals as part of a strategy to revitalize the economy, correct distortions, and advance the update of the Cuban economic model.

According to the government, these economic and social transformations will be implemented gradually, requiring the modification or repeal of over a hundred existing legal provisions, along with the approval of new laws and decrees to support their implementation.