Cuba sees hints of recovery, announces "audacious" measures to tame inflation



By Dave Sherwood and Nelson Acosta

HAVANA, May 14 (Reuters) - Cuba´s ailing economy has begun to recover in some sectors after two years of pandemic-induced contraction but soaring global prices for food and fuel require "audacious" measures to tame inflation, economy minister Alejandro Gil told Cuban lawmakers on Saturday.

Gil said Cuba saw a 38% increase in exports in the first quarter, boosted by the rising price of nickel, a top mineral export. He said inflation had also slowed despite upward pressure on the price of imports.

"We are beginning to see a clear and gradual recovery," Gil said.

But the price Cuba paid for imported goods jumped by nearly $700 million in the first quarter, outpacing the country´s modest gains in exports, a predicament Gil attributed to "imported inflation" driven by fast-rising prices for such products as fuel, corn for feeding livestock and wheat.

U.S. sanctions and soaring food and fuel prices, in part due to the Russian invasion of Ukraine, have put Cuba´s tepid recovery at risk and threaten to worsen shortages already forcing citizens to line up for food, medicine and other basic goods. {nL2N2W20F1}

Tourism, a top source of the foreign exchange necessary to pay for pricier imports, has also lagged well behind government targets, complicating recovery.

Gil did not provide figures for overall gross domestic product nor did he address how first-quarter results contributed to meeting the government´s target of 4% growth in 2022.

A major sticking point, Gil said, continues to be Cuba´s unofficial exchange rate, which has ballooned to five times the government rate of 24-1 in recent months, slashing buying power for the average Cuban.

To combat this, Gil said Cuba will begin selling foreign currency at a rate between the official and black market rates, but limit those deals to certain state-run and private businesses in a bid to boost output of high-demand products.

The economy minister said the more favorable exchange would underpin "production that will later be sold to the population in national currency."

Gil said citizens seeking to trade pesos for dollars would not be able to take part in the new exchange program, but that the cash-strapped government was working toward that goal.

“These are bold, innovative measures. There are no magic ... solutions that can solve all the problems at once," Gil said.
Reporting by Dave Sherwood and Nelson Acosta; Editing by Mark Porter

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.