Cuba is going through one of the most profound transformations since the triumph of the Revolution and the declaration of the island’s socialist character. This is a process driven by a package of 176 reforms that modify the entire economic and social structure of the country and aim to liberalize private capital and decentralize the economy.
Amid an intense national debate, during an appearance on national television, Cuban government authorities presented this Wednesday (8) the scope of measures related to the management model of state and private economic actors.
The authorities stated that the reforms aim to “boost, dynamize and grow” the business sector. This is an initiative that seeks to make the business sector “more diverse”, with the aim of generating the wealth that the country needs.
A reform in the midst of the crisis
The changes occur in a particularly complex context. The island is going through one of the most serious crises in its recent history, with an accumulated drop of 15% in GDP in the last five years. At the same time, the escalation of hostilities adopted by the United States since the end of January — the most intense in decades — aims to suffocate any attempt at economic recovery, an aggression that constitutes a true economic war.
According to the director of the Business System of the Ministry of Economy and Planning (MEP), Yovana Vega Mato, the circumstances faced by economic actors, both state and private, profoundly affected the management and reaction capacity of the business system as a whole.
“This entire set of coercive measures, so profound and so surgical, that have been adopted in the last period, also deeply harms the management and reaction capacity of the country’s business system as a whole”, he stated. At the same time, she classified the ability to implement transformations amid the difficulties faced by the country as “great challenges”.
The persistent exchange rate crisis, resulting from the absence of a fluid currency market, as well as regulations related to the control of cash and limits on bank withdrawals, are factors that restrict the liquidity and daily operations of new economic actors and constitute just some of the structural challenges that condition the viability of reforms.
According to Vega Mato, the new measures were designed to generate a “high interrelationship” between state and private actors. To this end, the reform expands the operational powers of state-owned companies and, at the same time, eliminates regulations for private companies.
New rules for the state and private sectors
Until now, the activity of economic actors, whether state, private or cooperative, was under the supervision of the Ministry of Economy and Planning (MEP). This hypercentralization introduced bureaucratic processes that reduced the dynamism of companies, especially state-owned companies, which operated under the authority of different ministries without the real ability to make business decisions, such as choosing suppliers or customers.
The reform creates two new institutions responsible for its regulation: the National Institute of State Business Assets (INAEE) and the Institute of Non-State Economic Actors. State-owned companies will no longer submit to the administrative decisions of ministries and will no longer depend on a centralized plan that determines how and where they should operate. Likewise, the creation of private companies will no longer depend on MEP approval.
According to information from the MEP, the island’s productive structure is made up of 23,172 business entities, of which 2,803 are state-owned companies, 15,200 are private micro, small and medium-sized companies (mipymes) approved since the opening of the sector in September 2021, 4,966 are cooperatives — the vast majority of which are in the agricultural sector —, in addition to 131 mixed companies and 72 companies with foreign capital.
According to Vega Mato, the flexibility introduced seeks to ensure that “all actors operate under similar conditions in the economy”.
In turn, the president of INAEE, Roberto Ricardo Marrero, explained that state companies will be able to create state mipymes, define their corporate purpose and approve prices, salaries and investments. The state will eliminate automatic financial bailouts, so state-owned companies will face the real possibility of bankruptcy and liquidation. Furthermore, state-owned companies will have the ability to create subsidiary companies.
Ricardo Marrero also stated that the recently approved Transparency Law and the Social Communication Law, designed to regulate the information relationship between public institutions and citizenship in a context of traditional opacity in the island’s public management, will play an important role in this process.
“We cannot make mistakes here. This is something important; there are experiences in the world that demonstrate that, when this principle is forgotten, the price for this consequence is paid”, he stated. In this sense, he highlighted that public supervision plays a fundamental role within this set of business transformations, by defending a mechanism of social control and citizen participation over the ongoing process of change.
In the private sector, the reforms will allow the creation of companies without hiring limits — until now, a maximum of 100 employees operated. It will also be allowed for the same person to own more than one company.
The president of the National Institute of Non-State Economic Actors, Lázara Mercedes López Acea, stated that many of these organizations already function, in practice, as companies, due to their production volume, reach, revenues and results.
“When you look at their reach, their level of activity, their revenue levels and the results they have been obtaining, it is clear that, in practice, they are already companies,” he stated.
It also opens up the possibility for foreign investors to participate directly in private businesses, without the obligation to associate exclusively with the State, which will allow the creation of corporations, a structure that allows the purchase and sale of shares in private companies and introduces investment mechanisms and financial associations that previously did not exist in Cuban legislation.
However, this opening will maintain specific regulations through which authorities will supervise which sectors and projects will be authorized, prioritizing those focused on food production, renewable energy and import substitution.
Source: www.brasildefato.com.br
