By Francisco Acevedo
HAVANA TIMES – This week, Cuba’s National Assembly convened to review 2024 and present plans for 2025—both years as disastrous as each other.
According to official figures presented during the sessions, losses were reported in exports of goods and services, amounting to $900 million less than what the government had planned for 2024.
I believe the only annual report that still references the COVID-19 pandemic is Cuba’s (I was surprised there was no mention of natural disasters, perhaps because the text was written months ago). It also mentions the global economic crisis, yet the rest of the world does not have figures as alarming as ours.
Low foreign currency income and high debt have severely impacted the already depleted island economy.
Exports of goods reached only 92.5% of the planned amount, while services achieved 101.6%, mainly thanks to medical services. Tourism and telecommunications, however, continue to decline. The excessive reliance on medical contracts is evident, while the prioritization of investments in tourism is not fully justified, with dozens of hotels operating with low occupancy rates throughout the year.
Farm production also fell short of expectations, especially in tubers, meat, and vegetables, meaning that nearly 90% of the country’s food consumption must be imported.
The drop in remittances, primarily from the United States, significantly impacted revenue. On the one hand, recent migration trends often involve entire families leaving, leaving no relatives behind to send money to. On the other hand, the exile community increasingly believes that every dollar sent to relatives supports the regime’s repression against those same families.
In financial terms, the regime’s income from medical contracts has dropped from about $11.5 billion annually eight years ago to around $2 billion now, after UN Human Rights Rapporteurs classified these contracts as “forced labor.” Similarly, remittances through government intermediaries which contributed about $2.5 billion annually ten years ago, have fallen to just over $80 million.
The outlook for the coming year looks bleak. According to Economy and Planning Minister Joaquín Alonso Vazquez (who took over mid-year after Alejandro Gil was removed, accused of corruption), Cuba projects GDP growth of just 1% for 2025.
This limited growth projection relies primarily on recovering in the tourism industry, increasing income from key exports, revitalizing productive activities like agriculture and industry, and improving the energy balance—all as improbable as the collapse of capitalism itself.
Regarding tourism, they aspire to an 18% increase in foreign visitors, which will be challenging given the growing perception of the island as an unsafe destination.
At the end of 2023, projections expected 3.2 million tourists in Cuba for the year. However, after reviewing the first semester, the expectation was lowered to 2.7 million. The year is not over yet, but it seems even that figure won’t be reached, as only 1.8 million visitors were recorded by October.
It’s also worth noting that for 2023, a growth of 2-3% was forecast, but GDP ended up contracting by 1.9%. It has already been ruled out that the economy will grow in 2024, even though the initial official estimate was for a 2% increase.
According to a report by the Economic Commission for Latin America and the Caribbean (ECLAC), only Argentina and Haiti will see economic contractions in the region in 2024.
The issue currently most concerning to the Cuban population—electricity—was barely addressed. However, Alonso admitted: “Current demands exceed our material capacities. It is crucial to find alternatives to reduce the deficit to manageable levels.” If he’s not the one looking for alternatives, then who is he referring to?
He explained that the plan is to generate 18,606 GW in 2025, but achieving this requires significantly increasing capacity from renewable sources, which are currently neglected and have very low productivity. Overall, the daily average availability of electric power of 1,400 MW falls far short of the average demand of 3,000 MW.
Notably, the gradual recovery of the National Electric System ranked fifth on a slide presented to the Parliament’s economic commission, while fourth place was assigned to securing resources for Defense and Internal Order, hinting at the government’s priorities.
Experts estimate that restoring the Electric System would require $8-10 billion in investment over ten years. The system collapsed three times in the last two months due to the poor condition of thermoelectric machinery, fuel shortages, insufficient investment, and reduced oil supply from Venezuela, which has recently been sending around 30,000 barrels daily—a third of what it delivered a decade ago. Rolling black outs have become the norm for some time now.
The minister stated that increasing external revenues through new exportable products (unspecified), attracting foreign direct investment (unspecified methods), improving remittance collection, and strengthening knowledge-related service exports are essential.
The government’s 2025 plan projects inflation to continue its downward trend, with estimates ranging between 25-30%.
Debt defaults prevent the government from accessing international credit, even from its trading partners, significantly hindering investments. For example, out of the eight Turkish floating power plants contracted to mitigate electricity shortages, only three remain, as the others left due to non-payment.
The return of Donald Trump as US president could bring significant changes, possibly worsening financial, tourism, and migration situations. Much of the food and other imports come from the private sector in the neighboring nation. If a new Trump administration influences their cancellation, things could get even worse.
Read more from Cuba here on Havana Times.
