Cuba's Economic Challenges: New Salary Decree and Exchange Rate Changes

Cuba has enacted a new decree allowing state enterprises to set their own salaries, a significant policy shift aimed at addressing ongoing economic challenges. According to OnCuba News, this measure decentralizes salary determination, previously governed by centralized guidelines, and is expected to enhance productivity and efficiency within the state sector.

The decree, which has been in a trial phase since 2021, resulted in enterprises achieving an average productivity increase of 14,000 pesos compared to others, with average salaries rising to 9,558 pesos.

Meanwhile, Cuba introduced a new floating exchange rate, reported by Havana Times, which will coexist with two fixed rates. The floating rate, initially set at 1,410 pesos per dollar, targets natural persons and private businesses, while the existing rates for state enterprises remain at 24 pesos and a symbolic 120 pesos per dollar.

The Central Bank of Cuba aims to use this new rate to stimulate competitiveness among exporters, yet many Cubans remain skeptical about its effectiveness. The new economic measures come amid a broader context of rising consumer prices and a move towards a more dollarized economy, as highlighted by CubaNet, where price controls are being enforced amidst rampant inflation.

In Guantanamo, for instance, authorities imposed 775 fines and closed 12 establishments for price violations, showcasing the government's struggle to manage economic expectations and realities.