The economy and the Cuban peso work like a ponzi system, it is the best analogy I can make to concisely understand the current reality of the nation. The lack of transparency of the Cuban totalitarian state is so great that the implausible and surreal is the norm in Cuba.
If the island suffers from one problem, it is its high import tendency, which generates a notable trade deficit. Since colonial times it became customary to put all the eggs in one basket and bring everything else from outside. Although for centuries, with ups and downs, this strategy worked because sugar exports generated sufficient income in foreign currencies, this is not the case today.
Although the dictatorship began to diversify the island's sources of income in the 1980s and this process intensified during the economic crisis of the 1990s, communist inefficiency has taken its toll. Accustomed to living with a parasitic economy with discounts and subsidies (first the Soviet Union and then Venezuela) they have not managed to establish a solid economic foundation that allows the nation to walk on its own two feet. This is why, in the face of the crisis or disappearance of the sponsoring states, the façade of stability falls and decadence takes over every sector in the nation.
As a consequence of these economic disasters and in an attempt to revive the country so as not to lose power, the communist oligarchy began a series of reforms. Although they have not provided the expected positive result, they have prevented total economic collapse. The reason for this situation can only be explained by the strong restrictions that accompany each small economic opening that is carried out. The implementation of a subsistence economy is only understandable if we have a notion of the fear of losing total control over the country of the communist elites who for decades have refused to grant any concession in terms of freedoms to Cubans.
If we add to this gradual opening that the most important private MYPIMES in the country are owned (through front men) by the country's main communist leaders (or their families), we can understand that the objective is not the well-being of the people. The worst thing is that the government controls, without being accountable for its management, the bulk of the country's foreign currency earnings from exports and remittances. The recipe for corruption and economic-financial disaster is ready.
However, the above is not what is truly Machiavellian. To avoid another revolt caused by discontent like those that occurred in July 2021 throughout the nation, they do not only use repression. They also use a bread and circuses technique, let's say that the bread is public health, sports and education programs. Where the lack of national production that stimulates the drop in prices that stops inflation and increases tax collection, is "resolved" with monetary emission.
In other words, it is produced and then exported, the foreign exchange earnings are spent by the state on God knows what therefore "there are no" resources to buy raw materials or spare parts and continue producing. The result? Less and less is produced, which generates more shortages, more inflation and less tax revenue. Solution? The worst of all, printing money out of nothing which will generate more inflation and thus the cycle. Now do you understand why the current Cuban economy is a Ponzi system? In this process, the Cuban peso in just 4 years has gone from 25 pesos to one dollar to 320, a devaluation of 1280% that has not yet come to an end.
If you want to better understand the Cuban reality, I invite you to explore this collection of articles on the subject.
@yecier/cuba-economy-and-inflation
@yecier/cuba-manual-for-a-economical-disaster
