Tuesday, May 29, 2012

801. A Chronology of Cuba's Economic Reforms

By Phillip Peters, Lexington Institute, May 22, 2012 


July – On July 31, 2006, Fidel Castro temporarily delegates power, and Raul Castro takes over provisionally as President of the Council of State and head of the Cuban Communist Party.


May – Private taxi drivers notice that police are no longer stopping them to check to see if they are licensed.

July – Raul Castro’s first major speech as acting President gives a glimpse of his reform ideas, calling for “structural changes and changes of concepts” and placing a priority on agriculture.  He quotes his brother Fidel: “Revolution is a sense of the historical moment, it is to change all that must be changed.”

December – The under-the-table pay supplements that foreign companies have long provided in hard currency to Cuban workers are legalized.  Companies must keep records of such payments and the workers must pay income tax on them.


February – Raul Castro is elected as Cuba’s chief executive, President of the Council of State, a post he held provisionally since 2006.

March – Following Raul Castro’s promise to remove “unnecessary prohibitions” that affect citizens’ lives, a series of consumer restrictions are lifted.  Computers and DVD players are permitted for sale to the public, Cubans are permitted to have cell phone accounts in their own name (previously, they typically enlisted a foreign visitor to open an account in the visitor’s name), and Cubans are permitted to stay in tourist hotels and to rent cars previously available to tourists only.

April – Raul Castro announces that the Council of State commuted death sentences of “a group of convicts” and left them with 30-year or life sentences.  This action left only three inmates on death row, all convicted of terrorism-related charges.  Two of these three, both citizens of El Salvador, had their death sentences commuted by the Supreme Court in 2010; the court changed their sentences to 30-year jail terms.

July – A program of agricultural land grants that had been under way for months was formalized in Decree-Law 259, providing for the distribution of idle state lands to individual farmers and cooperatives.  Grants are made in usufruct in ten-year terms for individuals and 25-year terms for cooperatives.

July – The transportation ministry announces that it will soon begin granting new licenses for private taxis.

August – A new labor policy removes ceilings on individual earnings in the state sector and directs state sector employers to develop sliding pay scales that reward productive workers with higher pay.


January – Regulations are published to enable licensing of new private taxis, and their numbers double within six months.

April – Following an announcement in December 2008 that the government was conducting “experiments…to lighten the state’s burden in the provision of some services,” the government begins turning over small barber and beauty shops to their workers, who pay rent and utilities and otherwise run the shops as their own business.

June – A new decree permits Cubans to hold more than one job, except for persons holding high-level jobs, teachers,  and health sector personnel.

August – Raul Castro tells the National Assembly that Cuba might have to do without some “beneficial and even laudable activities” that generate spending that “simply is not sustainable.”  He confirms the gradual closure of public boarding schools that combine study and farm work, which generations of Cubans attended starting as early as seventh grade.  The Catholic church applauds it as a “positive step” that will keep families together.

August – The Office of the Comptroller is established, headed by Gladys Bejerano, to strengthen auditing inside state entities.  The office goes on to figure in several investigations of corruption involving arrests of both Cuban and foreign businessmen.

September – Granma reports that as part of efforts to achieve “economic rationality,” the government will begin the process of closing 24,700 workplace cafeterias, beginning in four ministries in Havana.  Affected workers will receive 15-peso daily stipends.  The article notes that the cafeterias operate at an annual cost of $350 million, and some of their inventories find their way to the black market.

October – A signed editorial in Granma argues that the monthly household food ration book should be replaced by a system of subsidies that go only to the needy.


May – A meeting between Raul Castro and Cardinal Jaime Ortega begins a process, also involving the government of Spain, whereby 166 political prisoners would be  released from jail, including the 52 remaining from the 75 arrested in the spring of 2003.  Of those released, twelve decided to remain in Cuba and the rest accepted offers to go to Spain with family members.  

August –To encourage outside investment in the tourism sector, the maximum term for land leases to foreign companies is extended from 50 to 99 years, a move welcomed by developers of prospective golf course/real estate projects.

September – A statement by the Cuban labor union federation announces that half a million state sector workers will be laid off by April 2011, with a “parallel increase in the non-state sector.”

October – Regulations affecting small private entrepreneurship, which Raul Castro calls “one more employment option” for workers that will no longer be working in the state sector, are substantially liberalized.  Licensing offices, which for years had approved very few applications, assist applicants and generally grant licenses within a week.  A new tax system for entrepreneurs is instituted.  State newspapers, radio, and television explain requirements and procedures.  In the first month, 29,000 new entrepreneurs are licensed.

October – A signed editorial in Granma likens the government’s finances to those of a family confronting the truth that “you can’t spend more than you bring in,” and points out the need for spending cuts, including in social benefits.  It notes that education and health care, both free to the public, account for 47 percent of the government’s spending.

October – A news article in Granma reports on the “rationalization” of health care delivery in Havana through consolidation of clinics and specialized services, removing them from areas of low usage, and through reduction of personnel.

November – The “Lineamientos,” the economic and social policy guidelines that are the basis for the reform process in each sector, are published in draft form and subjected to nationwide discussion.

December – Finance Minister Lina Pedraza, addressing the National Assembly, anticipates that 1.8 million workers will join the “non-state” sector by 2015 and describes the elements of a new tax policy under discussion: sales taxes, taxation of private farmers’ income, and a tax on people who are able to work and do not work, in order that they contribute to the cost of social services.  


February – State media announce that sugar is being phased out of the monthly household  ration book, leaving consumers to buy sugar in state stores at eight pesos per pound (about $0.32, half the U.S. retail price), rather than at the ration book’s deeply subsidized price.  Similar announcements have been made regarding other products, as the ration book is slated for eventual elimination.

March – The plan to lay off a half-million workers by April 2011 is shelved; layoffs proceed but at a slower pace.

April – The newspaper Juventud Rebelde lists agenda items for a January 2012 national conference of the Communist Party, including “to plan the work of the Party, leaving behind prejudices toward the non-state sector of the economy.”

April – The Communist Party Congress elects Raul Castro to its top position, First Secretary, a post he held provisionally since 2006.

May – Following approval by the Communist Party Congress, the “Lineamientos,” the economic and social policy guidelines that are the basis for the reform process in each sector, are published in final form.  

May – To help entrepreneurs get on their feet and to spur job creation, certain taxes and regulations affecting entrepreneurs are eased.

July – The Ministry of Education laid off 3,415 employees in the just-concluded academic year, relocated 3,667, and was moving to lay off 6,877 more.

October – Car sales are legalized.  Previously, Cubans could only sell pre-1959 cars.

November – The Ministry of Sugar is dissolved and replaced by AZCUBA, an entity that will manage business units that previously belonged to the ministry.  

November – A new decree permits Cubans and foreigners legally residing in Cuba to buy and sell residential real estate, with a limit of one residence and one vacation home.  The measure streamlines the process of real estate transfers and encourages owners to update their property titles.

December – The government releases 2,900 prisoners serving sentences for non-political offenses.

December – Cuban banks begin to offer loans to entrepreneurs, small farm producers, and persons needing funds to fix up their homes.  Cuban media promote and explain the new credits.

December – New regulations allow all agricultural producers to sell directly to hotels and restaurants in the tourism sector.  Previously, tourism businesses could only buy from a state enterprise.  A Granma article explains that the idea is to reduce spoilage, “to simplify the links between the primary producer and final consumer,” and to allow tourism installations to “take better advantage of the potential of all the forms of production at the local level.”

December – At a National Assembly session, officials set a goal for 23,000 new homes to be built by Cubans’ “own effort” in 2012.  To facilitate do-it-yourself construction and repair, government retail stores are beginning to supply building materials, and consumers no longer need a government agency’s permission to buy them.  State media criticize the stores for moving too slowly; officials say only half the planned number of construction supplies showed up on store shelves in 2011.  In January 2012, profits from these sales were being used to provide low-income home repair grants, and Cuban media report that more than 200 grants were made in the first month.


January – The Ministry of Public Health announces that its outlays were 7.7 percent less in 2011 than in 2010.

January – The Scarabeo 9, a moveable drilling platform for offshore oil exploration, arrives in Cuba and begins exploration north of Havana, 28 miles from U.S. waters.  The exploration, conducted by a consortium led by the Spanish oil company Repsol in conjunction with the Cuban oil company Cupet, gives rise to hopes that Cuba could become self-sufficient in energy.  

March – Cuban media report on a Council of Ministers meeting that approved pilot projects for the creation of private cooperatives in three provinces in sectors other than agriculture.  

April – Cuban labor federation official Raymundo Navarro, in an interview with the EFE news agency, says that state payrolls have been reduced by 140,000 in 2011 and will be reduced by a further 110,000 in 2012; the goal is to reach a 500,000 reduction by 2015.  The original goal, announced in September 2010, was to reach the 500,000 mark by April 2010.

April – The number of Cubans working in the entrepreneurial sector, including both entrepreneurs and employees, reached 371, 200, an increase of 230,000 since October 2010.

April – Granma reported that in the first three months of 2012 there were 2,730 sales and 10,660 donations of homes, and 8,390 sales and 6,780 donations of cars.

May – Repsol concludes its exploration and announces that it found no oil.  The exploration rig will be passed to other companies, starting with Malaysia’s Petronas, to continue exploration in Cuba’s Gulf waters.

No comments: