The Cuban Government announced this Thursday a “cap” on profits allowed in purchases by state entities from non-state forms of management, such as MSMEs, cooperatives and self-employed workers.
A resolution of the Ministry of Finance and Prices set a 30% limit on expenditures by the state sector in its relations with the non-state sector.
Starting July 1, for the acquisition of goods and services through non-state entities, State entities will agree on prices and rates “whose maximum profit rate does not exceed 30% of the total costs and expenses,” details Resolution No. 209 of June 25, 2024, published this Thursday in the Official Gazette.
Furthermore, provincial and municipal councils are empowered to approve the maximum prices and rates for goods and services that they select “from among those acquired by state entities from the non-state sector, taking into account the particularities of each territory,” the law adds.
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According to the Ministry of Finance and Prices, This measure is among the Government’s strategies to “correct distortions” and “reboost the economy”, amid the “high level of inflation reached in recent years.”
Despite the measures and new strategies to “re-boost” it, the Government recently acknowledged that the national economy continues to show “an unfavourable outlook”. This was admitted in April by the head of the sector, Joaquín Alonso Vázquez, when reporting to the Council of Ministers on the economic performance in the first quarter of 2024.
The official then explained that, among other things, export revenues are declining and imports are also decreasing, while “different key economic activities are not being fulfilled, such as the main agricultural production, sugar and other derivatives, as well as the generation of electricity.”
Business Law in Cuba, an urgent need
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Alonso Vázquez also confirmed that more than 300 companies are registering losses in “strategic sectors,” while “the depreciation of the Cuban peso due to the informal exchange rate and, consequently, the increase in prices persists,” notes the official report.
Economist Pedro Monreal then questioned the fact that, despite the difficult situation of the business sector on the island, the authorities continue to “go round in circles” regarding the long-awaited Draft Law on Businesses.
For the economist Omar Everleny, who reflected for OnCuba about this standard, It must overcome the dilemma between state and non-state, and recognize the elements of business autonomy, legal security and ownership that all companies require in order to fulfill their purposes.
