A senior official at the Central Bank of Cuba has publicly acknowledged that the island's economy can no longer manage its ongoing crisis using the same outdated tools. He emphasized the urgent need for a comprehensive structural transformation to facilitate recovery.
Ian Pedro Carbonell Karell, who serves as the director of Macroeconomic Policy at the Central Bank and is also a deputy in the National Assembly of People's Power, made these remarks during the "Cuadrando la Caja" program. This show, broadcast by Canal Caribe, was dedicated to discussing the recent package of reforms approved last week.
"The Gross Domestic Product forecasts are quite bleak, including recent projections by CEPAL. Indeed, we are facing a crisis. In my view, the focus should be on transforming the economic model rather than merely managing the crisis, so we can halt the downturn, recover, and move forward," Carbonell Karell stated.
During another segment of the program, Carbonell Karell was even more forthright, stressing the necessity for profound economic changes and the creation of mechanisms that can generate wealth and value.
Challenges Ahead with New Reforms
His comments came just days after the National Assembly approved 176 reform measures on June 18. These reforms are organized into 23 strategic areas, including the authorization of private banking, non-state exchange houses, foreign investment in the Cuban private sector, and the removal of universal subsidies.
Carbonell Karell painted a grim macroeconomic picture: a drop in remittances through official channels, reduced exports and foreign investment, limited access to external credit, uncontrolled monetary issuance, a fiscal deficit projected at 74,500 million pesos by 2026, and a non-convertible national currency with multiple parallel exchange rates.
Dire Economic Forecast
CEPAL predicts a 6.5% drop in Cuba's GDP by 2026, the worst in Latin America compared to a regional average growth of 2.2%. Independent estimates are even more pessimistic: the Economist Intelligence Unit forecasts a 7.2% contraction, while economist Pedro Monreal warns it could reach 15%.
The official stressed that the banking and financial system is "a transversal and indispensable element" for the success of these reforms and insisted that these transformations do not mean abandoning socialism.
Implementation Obstacles
However, the path to implementation is fraught with challenges. Carlos Miguel Pérez Reyes, a deputy and president of the commission on small and medium enterprises, cautioned that the process requires changes to 81 high-level norms and thousands of resolution clauses, affecting over 5,000 economic entities.
Rafael Montejo, director of the Center for Management Techniques Studies at the University of Havana, summed up the central risk: "There are no magic solutions in economics, and it will undoubtedly require a tremendous effort, especially in terms of implementation. The fundamental risk we face is mainly in the execution."
Understanding Cuba's Economic Transformation
What structural changes are being proposed for Cuba's economy?
The proposed changes include authorizing private banks, non-state exchange houses, encouraging foreign investment in the private sector, and eliminating universal subsidies.
How does the Central Bank official view the necessary reforms?
The official views the reforms as essential for halting the crisis and believes they require a fundamental transformation of the economic model rather than mere crisis management.
What are the projected economic outcomes for Cuba?
CEPAL forecasts a 6.5% reduction in Cuba's GDP by 2026, while independent estimates suggest even steeper declines, pointing towards a severe economic downturn.