The exchange crisis in Cuba does not stop and inflation skyrockets. Monetary reform 2021: a total failure, regime led to a devaluation.
One of the currencies that depreciated the most against the US dollar was the Cuban peso . In 2021 a devaluation of 96% and in August 2022 a new -80%. The two major devaluations that took place in the last period have not helped to stop the weakness of the Cuban peso. The living conditions of Cubans have not improved.
The island’s inflation at the end of 2021 was 77% and in September 2022 it was back to 37%. Perhaps what didn’t work was that the devaluation of the exchange rate took place without a simultaneous liberalization of the domestic economy. In summary, domestic production stagnates, imports increase and a weaker exchange rate results in a rise in consumer prices.
The scarce inflow of foreign currency with the tourist collapse of the pandemic. It kept imports low and blew up inflation with scarcity of goods and services. Prices exploded, pensions and salaries were increased by up to 500%. In 2021 the fiscal deficit was 11.7% and was financed by printing money. Excess liquidity has created even higher expected inflation. Many Cubans have found themselves selling their properties to go abroad and start a new life. Cubans hope that hyperinflation will be at least partially cushioned by the reopening of tourism, but it is not enough to bear the full economic burden. There will be more exchange rate devaluations, so Cuba will have to prepare for anything and everything!
- In Cuba the exchange crisis does not stop and inflation soars (investireoggi.it)