In the midst of the current economic crisis and price speculation, the Cuban government announced that it will cap prices on state purchases from Cuban small and medium-sized businesses, the MSMEs, by decree. Will this curb speculation and abusive prices?
From the Ministry of Finance and Prices, this Thursday it was learned that the Cuban government would limit profits on state purchases from MSMEs: part of the strategy to correct the economy?
According to Resolution No. 209, published in the Official Gazette No. 57 of June 25, state companies in Cuba will not be able to obtain more than 30% profit on their purchases from MSMEs.
This measure is part of the economic reform package announced by the authorities at the end of 2023, officially called “Government projections to correct distortions and reinvigorate the economy,” according to the ruling party. But will these new measures really benefit consumers?
Its main objective is to try to contain state spending and contribute to controlling inflation, which has been increasing in recent years, according to them. It will be imposed from next Monday, July 1.
Cuba caps prices for SMEs
In addition to Cuba capping prices for MSMEs, which is further detailed in the resolution. In general, starting in July, state-owned companies will not be able to pay more than 30% of profit to MSMEs for the goods and services they purchase from them.
Also, this limit would apply to the total costs and expenses of MSMEs, including taxes. In addition, provincial and municipal councils may establish maximum prices for some specific products, considering the characteristics of each territory.
The purpose of the Cuban government, by capping these prices on MSMEs, is to establish measures to control prices and therefore limit profits on state purchases.
The Cuban authorities have implemented a campaign to reduce inflation through price controls and sanctions on private companies. However, this strategy does not address the root causes of the problem, which lie in the structural economic crisis facing the country. We will see if this decree improves the price problem.
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