The goals of Cuba’s 2025 economic plan
Optimism with feet planted firmly on the ground
On December 18, 2024, Cuban Prime Minister Manuel Marrero Cruz presented a report on the economy to the National Assembly of People’s Power (ANPP for its initials in Spanish). The National Assembly of People’s Power is the highest legal and constitutional authority in Cuba. Its 405 deputies are elected directly and indirectly by the people in a three-stage process that begins with neighborhood nomination assemblies. The electoral process is supported by national, provincial, and municipal candidacy commissions constituted by representatives of mass organizations of workers, students, farmers, women, and neighborhoods, and it is conducted without the participation of the Communist Party of Cuba or any other political party. The current legislature of ANPP is the tenth that has been constituted since the system of people’s power was established by the Constitution of 1976, which was approved in referendum by more than 90% of the people.
The position of Prime Minister was established by the Constitution of 2019, as a dimension of changes in the administrative structure of the state. The Prime Minister is named by the President, subject to approval by the National Assembly. The President is elected by the National Assembly. The Constitution of 2019 was written through a constitutional assembly formed by the entire people, and it was approved in referendum by 86.85% of the voters, with 90% of resident citizens voting (See “Participatory democracy in Cuba: The 2018 constitutional assembly formed by an entire people,” September 10, 2021).
Manuel Marrero Cruz was named Prime Minister by Cuban President Miguel Díaz-Canel in 2020. Previously, Carrero had served as Minister of Tourism, and he directed the Ministry during a time of significant expansion of the Cuban tourist industry, thus arriving to the position of Prime Minister with the reputation of a man who is able to get things done. During his tenure as PM, he has earned the confidence of the people with his blunt talk with respect to deficiencies in production and illegalities.
Approximately one year ago, Marrero Cruz assumed greater responsibility in reporting to the people on the economy, arriving to this greater role in a moment in which the Minister of Economy and Planning was dismissed amidst accusations of bad management of currency exchange regulation and allegations of corruption.
In his December 18 address to the National Assembly, the Cuban Prime Minister declared that the government, the Party, and the people face the future with optimism, but with their feet planted firmly on the ground. That is, with faith in their own capacities for resistance and creativity, but with realistic recognition that the unjust blockade is likely to continue in the foreseeable future, and with a self-critical consciousness that makes the corrections and improvements in the productive processes that can be attained in spite of the blockade.
Marrero Cruz asserted “we are dissatisfied that progress has not been made with the necessary speed, especially on those issues that the population demands the most.” He noted that an important goal in the economic plan is a change from subsidizing products in the monthly food basket to subsidizing persons in situations of vulnerability, but they have not been able to advance on this objective, because it would adversely affect the people in the present situation. But the transformation from subsidizing products to subsidizing persons remains a goal of the economic plan. In this vein, the plan calls for the elimination of subsidies for natural medicine, except for low-income persons.
Marrero designated ten goals and priorities of the economic plan of 2025, the first eight of which are continuations of the economic plan of 2024. The ten objectives are the following.
(1) Advancing in the implementation of the plan for macroeconomic stabilization through adhering to the planned projections with respect to the state budget deficit and control of prices. The state made progress in 2024, registering an annual surplus for the first time since 2014, which was attained by the elimination of tax exemptions for small companies, by an increase in the sale of tobacco, by new taxes on persons who leave Cuba frequently to buy abroad products that they sell in Cuba, by taking steps to reduce tax evasion (with emphasis on bigger companies), and by updating procedures for evaluating the costs of houses that are sold. The state is finishing the year with an accumulated budget deficit of 90 billion Cuban pesos, less than the 147 billion pesos approved by the 2024 plan.
In response to speculative pricing, some 600,000 inspections were conducted, through which 357,000 violations were found, resulting in fines totaling 980 million pesos. In addition, there were 17,000 forced sales [confiscation with compensation] for extensive violations. The system of payment of inspectors includes rewards to identify and report violations, in order to prevent systemic fraud and abuse in the inspection process.
The State control of the private sector includes the expectation that the sales of private companies be conducted through banks via electronic commerce, in order to ensure the payment of taxes by private companies. New regulations specify that the buying and selling of goods and services from the private sector by state companies can result in no more than 30% profit for the private enterprise. In addition, the owners of new private companies ought not be family members of the directors of a state company with which it is forming a relation, nor should they be ex-employees of a related state company. Furthermore, regulation of the retail market has increased, not with the intention of prohibiting, but to give it order. It is necessary to integrate all economic actors, private and public, in accordance with the national economic plan.
Even though some prices have been reduced as a result of the inspection program, its impact on inflation has thus far been limited, due to the fact that national production is a key factor in inflation (for its effect on supply in relation to demand). The annual rate of inflation remains high at 26%, slightly less than the 28% rate of the previous year.
The Prime Minister noted that a partial dollarization has been approved, permitting sellers who sell in pesos to set the price with reference to the dollar, and permitting the sale in foreign currencies in tourism and in certain goods. This measure is designed to control the illegal use of the dollar; the goal of de-dollarization is maintained.
When macroeconomic stability is attained, the Prime Minister noted, the rate of exchange will be adjusted daily.
(2) Increasing the diversification of income from outside the country. This objective was not attained during 2024, Marrero Cruz noted, because the level of exports was less than what was projected by the plan, and tourism has not recovered to the level that had been anticipated. In addition, foreign investment in establishing new exports did not attain the expected results. Addressing this reality, changes in the treatment of foreign investment have been approved, seeking a greater attraction to foreign capital, including permitting more foreign companies to operate in dollars. Several new measures to stimulate exportation have been approved.
(3) Increasing national production, with emphasis on food. National production has had a tendency toward not fulfilling the projections of the economic plan, as a result of different factors, including insufficient supplies, fuel, and energy. In addition, there are subjective factors, in which good productive practices found in some places are not generalized. In particular, the plan was not fulfilled with respect to the production of milk, eggs, meat, and corn. It is necessary to improve food production, because such shortfalls make necessary the financing in foreign currencies the importation of food for the monthly food basket. This past year, importation for the food basket was reduced to 45%, but more advances must be made in this. The reduction of some tariffs has been approved, with the intention of increasing the importation of raw materials necessary for national production.
Only 20% of food production is undertaken by state enterprises; food production is primarily in the hands of agricultural cooperatives and farmers. So the state needs a good system of contracts. In 2024, many producers violated the terms of the contract with respect to the use of land, and fines have been imposed; new regulations have been developed to address this. For 2025, some 80,000 producers are contracted that were not contracted previously.
The lack of raw materials has had an impact on the production of medicine, making necessary the purchase of medicines in the exterior, which is costly.
Urban agriculture advances well. More than one million new parcels of land have been incorporated into the program, involving families and places of work, bringing urban cultivation to 20,000 square meters per inhabitant. All centers of work should develop parcels, selling at low prices to their workers.
New solutions are needed to reverse the dissolution of the sugar industry. Sugar production has been greatly affected by the lack of electricity and fuel, but these obstacles can be overcome.
(4) Improving and modernizing state companies. Marrero Cruz noted that the state companies are the principal entities of the economy. A new law is designed to promote the autonomy and productivity of the state companies, including more autonomy to establish their own salary system.
(5) Advancing in the strategy of municipal development, in which local governments play a central role, utilizing endogenous resources and local talent. Priority must be given to local projects that contribute to local development.
(6) Improving government management by responding to the proposals and demands of the people as put forth in the accountability meetings with elected delegates. Some of these proposals have been addressed, but others only partially, because of a lack of resources. In addition, some Party cells in places of work have not demonstrated the necessary leadership and exemplarity.
(7) Continuing to develop social policies for the protection of persons and families in situations of vulnerability. The government and the Party have a strong commitment to maintaining the conquests of the Revolution with respect to health, education, and sport.
(8) Advancing in the reduction of crime, corruption, illegalities, and social indiscipline, with attention to the causes and the conditions that generate such conduct. There has been in recent years an increase in drug use and in criminal and anti-social behavior. The recent National Exercise for Prevention and Confrontation is an important step.
(9) Advancing in the recovery of the national electro-energy system. Progress has been made in the past year in reducing fraud and theft with respect to electricity. Taking into account the fact that the expansion of the private economic sector has led to a significant increase in the consumption of energy, all new companies that are now being approved must include the use of renewable energy.
In 2024, only 39% of fuel oil and 37% of diesel gas needed for the production of electricity were available, due to limited financial resources and obstacles to their purchase in the exterior. At the present time, only 4% of electricity is generated through renewable energy. This situation will be different in the coming year, as the installation of photovoltaic parks proceeds.
Because of the dedicated work of the electrical workers during recent blackouts, the salaries of electrical workers have been increased.
(10) Managing new government programs with respect to science and innovation, social communication, and the digitalization of domestic commerce.
In concluding his comments, the Prime Minister declared that the transcendental task of implementing the economic plan of the government and the Party “will continue being the common thread of our work, aware that it is the most viable alternative in facing the challenges of recovery and the revival of the economy, in conditions of economic war and the worsening of the economic and financial crisis worldwide.” Marrero Cruz refers here to the unconventional war waged by the United States against Cuba since 2017, when the Trump administration decreed 243 measures against the Cuban economy, thus intensifying the U.S. blockade against Cuba, which was initiated in 1960.
Marrero Cruz observed that “learning from the mistakes made and the experiences acquired in the implementation of the government plan has put us in a position to move to a stage with greater and more favorable results for the population. Achieving it depends on everyone.”
Further considerations
As I maintain in my commentary of December 17, 2024 (“Communist Party of Cuba holds Plenary”), the Party and the government have a scientifically based national economic plan that responds to the intensification of the U.S. blockade since 2019. The plan includes increasing national production through creative production at the local level, with high levels of participation by the people. And it includes reducing the state deficit as well as combatting abusive prices and corruption through preventive and punitive measures. In the December 18 speech to the National Assembly by Prime Minister Manuel Marrero Cruz, we have a glimpse of the struggle being carried forward by the government and the Party.
For a previous commentary on the efforts of the Cuban government to regulate the private sector, see “Cuba’s National Assembly holds session: Correcting distortions in the economy due to noncompliance with the national plan,” July 23, 2024.
Due to the intensification of the blockade under Trump and Biden, times are hard in Cuba, stimulating emigration, and perhaps providing an excuse for some private economic actors to evade the goals of the national economic plan and to impose abusive prices on the people. There was an article on Cuba recently in The New York Times, describing a situation of hopelessness and despair, attributing all gains to Obama, and emphasizing the comments of owners of Classic Car taxis in Havana. But perhaps the real story of Cuba in the current historic moment is not the shortages and the hardships, but the exceptional quality of the Cuban leadership, and the resistance, endurance, creativity, and determination of the majority of the people.
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Charles - My wife and I will be in Havana from January 28th to February 15th - living in an apartment near Vedado - Do you have any time or inclination to get together for a chat.
Let me know - David Kidd - dkidd10@gmail.com