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  HOME | Cuba

Coronavirus Crisis Deepens Cuba’s Chronic Economic Woes

HAVANA – Raquel Rosabal, an 89-year-old Cuban widow with a 245-peso ($10) monthly pension, lives alone in an old house with a shared patio in the Santiago de las Vegas municipal district south of Havana and relies on the help of friends and neighbors for her daily sustenance.

Her financial situation has worsened due to the recent further deterioration of Cuba’s economy, which already was suffering from chronic structural deficiencies, a reduction in aid from its crisis-hit ally Venezuela and a stiffening of the United States’ decades-old embargo on the Communist-ruled island and now is being hard hit by the coronavirus-triggered lockdown.

The most immediate impact of the stay-at-home order and closures of non-essential businesses has been shortages of basic products, which either have disappeared altogether or are being sold at much higher prices on the black market.

Three and a half kilos of rice, two kilos of sugar, a half-liter of soybean oil, a packet of mixed coffee, a packet of pasta, 15 eggs, a handful of grains and a pound of chicken make up the monthly food basket the government provides at subsidized prices.

But 30 days can feel like an eternity, even for the most frugal of Cubans.

“Who can get by on that?” Raquel said when asked if the food basket is enough to last her the entire month.

“You could get things more easily before. Now I get what I can little by little, with help from friends who run errands for me and bring me food. This week I ate fish that my neighbor brought me,” the pensioner said.

Under a roof that is on the verge of collapse, Raquel’s living room is the scene of an animated discussion involving her and two other neighbors: Marianela, a 55-year-old chemical engineer, and her daughter Melissa, a 22-year-old student.

Even though the other two women are better off financially, they also are struggling at the moment.

“We went a month without toothpaste because it didn’t arrive. Finally, they started selling a tube that had cost a dollar for four or five dollars on the street,” said Melissa, whose lone source of income dried up in March when the restaurant where she worked in Old Havana was forced to close.

Her mother is not any more optimistic.

“There have always been necessities, and you’ve had to find solutions here or there. But with this situation everything has gone up in price; there are also difficulties because of the blockade (the US embargo), but there are things that have nothing to do with the blockade,” Marianela said.

The situation outside supermarkets tells the story on the Caribbean island.

Dozens of people wearing face masks line up for hours to purchase a liter of cooking oil or two kilos of a much-coveted portion of chicken, the prices of which are similar to those in Spain or the US.

Other items such as dish-washing detergent and shampoo have disappeared from the market completely.

The current situation is “very delicate,” partly due to the island’s stifling deficit in its balance of payments, Cuban economist Ricardo Torres, a professor at the University of Havana, told EFE.

He noted that the island only produces a fraction of the foodstuffs and basic products the population requires, with the remaining 80 percent having to be imported.

The coronavirus crisis poses a particularly daunting challenge because it affects two of the island’s main sources of hard currency: tourism, which has evaporated completely over the past two and a half months, and remittances from abroad.

If tourism revenues fall by between 60 percent and 80 percent this year, Cuba could lose between $1 billion and $2 billion, roughly equivalent to the country’s annual budget for food imports, government website Cubadebate said this week.

“The most difficult thing is predicting what will happen with remittances, although with unemployment levels like what we’re seeing in the US it’s impossible to imagine that they’re not going to fall,” Torres said.

Miami-based consulting firm Havana Consulting Group estimated in April that the pandemic would cause remittances to fall by 32 percent – from $3.7 billion in 2019 to around $2.5 billion this year.

The abrupt halt to tourism, as well as the stay-at-home order and other restrictions aimed at slowing the spread of the novel coronavirus, also has dealt a crushing blow to the island’s growing private sector.

Especially hard hit has been hospitality industry “cuentapropistas” who have been forced to shut down their hotels and restaurants.

Like in earlier crises, Cuban leaders have called for increasing and diversifying food production as a means of reducing dependence on imports.

Torres, for his part, says the “current model is not responding to the country’s needs” and supports a “much larger space for individual producers and non-state forms.”

He and other economists, however, see structural reforms as long-term solutions, while the country’s interminable lines, shortages of basic foodstuffs and disappearance of hygiene products are problems that are crying out for an immediate fix.

 

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