CubaPLUS Magazine

Through a series of new economic measures, Cuba is seeking to reshape its financial landscape, addressing current hardships while looking toward the future. This is the consensus among both local and international analysts closely monitoring the island's recent approval of a sweeping package of economic reforms that opens the door to the private sector and foreign capital.

During an extraordinary session, the National Assembly of People’s Power (Cuba’s parliament) unanimously passed a comprehensive program of 176 economic reforms, representing the most significant shift in the island's economic model to date. This unprecedented overhaul of Cuba's socialist framework comes amid a profound structural crisis and intense pressure from the U.S. administration.

The package of proposals—presented by Prime Minister Manuel Marrero and backed by the Communist Party of Cuba (PCC) and revolutionary leader General of the Army Raúl Castro Ruz—was approved by a show of hands by more than 400 lawmakers. The program outlines deep transformations in key sectors, including banking, tourism, agriculture, the foreign exchange market, and the state enterprise system.

A cornerstone of the reforms is the conversion of state-owned enterprises (SOEs) into joint-stock companies or commercial corporations, granting them greater management autonomy. While the state will define its shareholding limits, it will retain majority ownership only in sectors deemed strategic for national development. Under the new rules, both individuals and legal entities—Cuban and foreign alike—can purchase shares in state-owned enterprises and assets, subject to proving the lawful origin of their funds.

This opening is complemented by an Investment Program designed to incentivize financial participation from Cubans residing both on the island and abroad. Furthermore, the new legal framework authorizes the establishment of private companies with no limit on size, eliminating the previous 100-employee cap that had been in place since 2021, when micro, small, and medium-sized enterprises (MSMEs) were first legalized. Cuban citizens will now also be permitted to own more than one private company and hold stakes in other businesses.

For the first time, foreign capital will be allowed in the private sector; previously, foreign investment could only be channeled into state-run joint ventures. Additionally, the government has reduced the list of prohibited activities for non-state actors and authorized the creation of MSMEs within the agricultural sector. The reforms effectively grant Cuban residents abroad the same status as foreign investors, allowing them to purchase shares in state enterprises and invest directly in private businesses.

In the tourism sector, new business models have been authorized, such as the leasing or sale of real estate to both resident Cubans and those living abroad. Municipal governments will also have the authority to manage local development projects funded by the Cuban diaspora.

Addressing the National Assembly, Cuban President Miguel Díaz-Canel justified the measures, stating that Cuba is facing "the most difficult hours of this century," adding, "we bear the historic responsibility of saving it." While the president emphasized that this market opening does not mean abandoning the socialist model—pointing to the economic transitions of China and Vietnam—the reforms nevertheless mark a major turn toward a new economic paradigm.

These measures arrive during an acute economic crisis. According to estimates by The Economist Intelligence Unit, Cuba's gross domestic product (GDP) has contracted by nearly 23 percent since 2019. This downturn is exacerbated by the tightening of the U.S. embargo, which severely restricts oil imports to the island, forcing a fundamental shift in the nation's economic mindset.

(Taken from Prensa Latina)