The economy remains dominated by big, unproductive state firms that have privileged access to credit and dollars. This keeps Cuba far poorer than it should be
Save time by listening to our audio articles as you multitaskEven before the hurricane swept in, Cubans had a lot to protest about. The island is undergoing the worst economic crisis since the 1990s, after the fall of the Soviet Union. The current problems started with Venezuela’s economic collapse in 2014, which reduced the amount of cash and cheap oil it sent to the island.
Salaries for state workers have increased five-fold. But that barely buys a meal. Marín, a primary school teacher, earns 4,200 pesos a month. At the official exchange rate, that is $175. In reality it is $21. He drives a taxi to earn more. Similarly, from their kitchen in an outhouse, Sandra and Yoanka Borges describe bartering with neighbours for milk, sugar and eggs to make the Cuban sweets for their business, “Dulces Doña Manuela”.
Cubans have seized these opportunities. More than 5,000 small businesses were founded in the year after legalisation. Today private enterprises outnumber state ones. But they are far smaller, and a thicket of regulations keeps them that way. The economy remains dominated by big, unproductive state firms that have privileged access to credit and dollars. All this keeps Cuba far poorer than it should be.
Meanwhile, the power cut caused by the hurricane is not a one-off. The government has failed to overhaul its ageing electricity grid. Cuba currently relies on five Turkish power generators on ships floating off the coast. The island’s total supply is only two-thirds of the 3,000 megawatts of demand. Blackouts often hit Havana as well as the countryside.
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