Tuesday, May 13, 2008

"Material de estudio"

Last Friday AP’s Havana bureau wrote about a Communist Party study guide regarding Cuba’s dual-currency monetary system. This kind of document is distributed to party members as a basis for discussions in local-level party meetings. My impression, based on having read one years ago on another topic, is that they are a means for the party to impart information, its analysis, and its point of view – and to establish support and a common set of expectations regarding future action.

Based on the AP’s account (English here, Spanish here; there is different information in the two articles) the message seems pretty clear: a) the party recognizes that Cubans want the dual-currency system to end, b) it wants the public to understand that change will be gradual, and c) the key is increased productivity.

The paper is based, AP says, on the Central Bank’s view of the situation. It recommends gradually increasing the pesos’s value relative to the convertible peso, with gains in productivity, not a pre-cooked timetable, setting the pace.

Moving gradually, the central bank figures, it can avoid setting off inflation or a run on merchandise in stores.

“The elimination of the dual currency will lead to better measurement of economic efficiency and will be a positive factor to promote our development…but it is not a measure that will in itself create wealth,” the paper says.

So the bottom line in terms of the party’s message is that action on the peso will be gradual, and the faster production increases, the faster it will happen – similar to messages we have seen in articles such as this. And in policy terms, the bottom line seems to me to be that the government is setting the bar high for its own action in raising production throughout the economy.

What interested me more was a secondary point: the Central Bank wants to see a reduction in “indiscriminate” subsidies, because a reduction in government spending will make its currency transition easier.

There are a number of “indiscriminate” subsidies in Cuba, but my guess is that this is a reference to the biggest of all, the distribution of food to every household on the island through the ration book (libreta de abastecimiento), regardless of income.

As discussed here, if Cuba has decided to drop the ration book and target food assistance to the needy only, then we have a sign of major change in government and in the agricultural sector.

The agriculture ministry enterprises that collect, warehouse, and distribute products that are the state’s exclusive domain – potatoes, dairy products, etc. – would have no more reason to exist.

So what would be in play would be a more rational approach to public assistance, a big reduction in the agriculture ministry bureaucracy, and a reduction of the state’s role in that sector as these intermediary enterprises disappear.

Is this kind of “structural change” possible? Maybe so – officials have talked about the possible disappearance of the libreta, the central bank seems to be voting in favor of it now, and stories from the agriculture sector hint in that direction. Like this one, about how milk producers in Havana province are increasingly selling directly to consumers, not through a state enterprise. Or this one, which reports that the closing of 104 enterprises in the agriculture sector is planned, and most of those that remain after this bureaucratic bloodbath will have a change of mission, to provide services to producers.

Finally, the paper contained this nugget: 59 percent of Cubans’ bank savings are in pesos, 36 percent in convertible pesos, and five percent in dollars. So if you exclude mattress money, the action taken by the Central Bank in 2004 succeeded in soaking up dollar liquidity.


Anonymous said...

Hey, Cuban Central Bank, how about food stamps to buy produce at private famers' markets? Its not rocket science, comrades.

Anonymous said...

Hey, Cuban Central Bank, how about food stamps to buy produce at private famers' markets? Its not rocket science, comrades.


The Cuban people have absolutely no incentive to work towards "increased productivity."


Anonymous said...

"The Cuban people have absolutely no incentive to work towards "increased productivity."

And 70 percent of Americans do?

What about most avererage Hatians, they have incentive?

Poor mexicans, can they salir adelante? if you think so, you haven't read any research or have experience with poor in latin america


Well, first of all, I wasn't speaking about either Haitians or Mexicans . . . second of all - if you think a Cuban has no experience with "poor in Latin America," you're living in an alternate reality or universe.




I feel it is important to point out that the sort of animosity apparent in your tone is very common when it comes to Cuba, and this is something I've never been able to understand. Oftentimes, whenever anyone in the Cuban community opens their mouth, they are met with that same sort of animosity and I am at a loss as to why. I fail to see what type of threat we pose against anyone (I'm speaking about the Cuban people here and not the government) and as a result of that, simply do not understand the antipathy often expressed towards us.


Anonymous said...

cubawatcher -

On the one hand, you are right, the antipathy is not deserved,

on the other hand the antipathy is present, i believe, b/c anytime a cuban american opens their mouth, many have the 'babalu' heny gomez types in their heads.

henry, val, and his ilk do deserve our antipathy if you ask me. their way of thinking is dangerous and "un-american".

they take our right to see our family members. with their strong support of the embargo, we see how it hurts our family members left behind in cuba. (yes, i know but its the cuban gov.). Still, the embargo as any common habenero will tell you , hurts them in many ways.. even Yoani says this. That's one reason for the antipathy- you (the historic exile who has no more roots in cuba) hurt our close and dear families left behind in Cuba.

your polices, while maybe well intentioned, have brought tears to my mother.



You are making so many assumptions without understanding the facts.

1) "you (the historic exile who has no more roots in cuba) hurt our close and dear families left behind in Cuba."

I am a man in my 30s with a great deal of family on the island who I still visit.

2) You automatically assume that since I come from the exile community, that I am in lock-step with every measure taken by some folks in the south-florida community. The fact of the matter is that I myself, don't agree with every method used by the exile community but you can't lump all these folks into the same put. There are many different views and methods of action. I don't believe generalizing solves anything.

Furthermore, one must remember that although some of the methods may in fact be counterproductive, the goals are the same, and just as nobel - the end of Fidelismo and the beginning of giving the Cuban people the reigns to their own destiny.

I think folks (on both sides of this issue) tend to be rather myopic from time-to-time and I find myself becoming increasingly tired by that fact. I am tired of the creation of dividing walls.


Anonymous said...

In the last few days I've heard several cuban officials singing the new hit "Increase Productivity and everything will be fine".
It seems like they just have found their new justification for all the cuban problems they don't have the capability nor the intention to fix.
It's over guys, they are confortable once more.