© Reuters. FILE PHOTO: Cranes dot the skyline as the construction of luxury hotels and the renovation of historic buildings are underway, in Havana, Cuba May 16, 2017. Picture taken May 16, 2017. REUTERS/Stringer
By Dave Sherwood and Nelson Acosta
HAVANA (Reuters) – Cuba’s struggling economy has started to recover in some sectors after two years of pandemic-induced contraction, but soaring global food and fuel prices require “bold” steps to bring inflation under control, Economy Minister Alejandro Gil told Cuban lawmakers. Saturday.
Gil said Cuba saw a 38% increase in exports in the first quarter, boosted by the rise in the price of nickel, one of the main mineral exports. He said inflation had also slowed despite the upward pressure on the price of imports.
“We’re starting to see a clear and gradual recovery,” Gil said.
But the price Cuba paid for imported goods jumped nearly $700 million in the first quarter, outpacing the country’s modest export gains, a predicament Gil attributed to “imported inflation” driven by rapidly rising prices of commodities such as fuel, corn for livestock feed and wheat.
US sanctions and soaring food and fuel prices, in part due to Russia’s invasion of Ukraine, have jeopardized Cuba’s timid recovery and threaten to deepen shortages, already forcing citizens to queuing for food, medicine and other basics. {nL2N2W20F1}
Tourism, the main source of foreign exchange needed to pay for more expensive imports, has also lagged behind government targets, complicating the recovery.
Gil did not provide figures on overall gross domestic product or explain how the first quarter results helped meet 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 climbed to five times the government rate of 24 to 1 in recent months, dramatically reducing the average Cuban’s purchasing power. .
To combat this, Gil said Cuba would begin selling foreign currency at a rate between official rates and black market rates, but would limit such transactions to certain public and private companies in an effort to boost the production of commodities. in high demand.
The economy minister said the more favorable exchange rate would support “a production that will then be sold to the population in national currency.”
Gil said citizens looking to exchange pesos for dollars would not be able to participate in the new exchange program, but the cash-strapped government was working towards that goal.
“These are bold and innovative measures. There are no magic bullets…that can solve all problems at once,” Gil said.
