Tarea Ordenamiento

Tarea Ordenamiento
Name	Tarea Ordenamiento
Country	Cuba
Date announced	2020
Date implemented	2021
Status	Ongoing
Key people	Miguel Díaz-Canel, Marino Murillo
Preceded by	Dual currency system

Tarea Ordenamiento. It is a comprehensive economic reform package enacted in Cuba beginning in January 2021, representing one of the most significant overhauls of the nation's economic model in decades. The program, whose name translates to "Task of Reordering," was designed to unify the country's complex dual currency system and eliminate extensive state subsidies. Spearheaded by President Miguel Díaz-Canel and former economy czar Marino Murillo, the reforms aim to stimulate productivity, reduce fiscal deficits, and modernize the socialist economy amidst a severe crisis exacerbated by the COVID-19 pandemic and tightened U.S. sanctions.

Background and context

The necessity for Tarea Ordenamiento stemmed from decades of economic distortions created by the coexistence of the Cuban convertible peso (CUC) and the Cuban peso (CUP), a system formalized in the 1990s during the Special Period. This duality created vast inequalities between those with access to foreign currency and those reliant on the weak domestic peso, while massive state subsidies on goods and services created a unsustainable fiscal burden. Previous attempts at gradual reform under Raúl Castro's administration, including the Lineamientos (Guidelines) from the 6th Congress of the Communist Party of Cuba, laid the groundwork but failed to fully address core monetary issues. The economic pressure intensified due to the Trump administration's activation of Title III of the Helms-Burton Act and the collapse of tourism revenues during the global health crisis.

Objectives and goals

The primary objective was the elimination of the Cuban convertible peso to establish a single currency, the Cuban peso, thereby simplifying the monetary landscape. A central goal was the drastic reduction of the government's subsidy regime for essential goods and utilities, which drained state resources. The reforms sought to decentralize state enterprises, grant more autonomy to state-owned enterprises in Cuba, and legally recognize the expansion of the private sector in Cuba and non-agricultural cooperatives. Ultimately, the program aimed to increase national productivity, correct major price distortions, and create a more realistic and functional economic framework within the socialist system.

Key measures and policies

The cornerstone policy was the official elimination of the Cuban convertible peso and the establishment of a single exchange rate, initially set at 24 CUP to one United States dollar. This was accompanied by a sweeping increase in wages, pensions, and social assistance benefits to offset the impending price hikes. The government significantly raised prices for electricity, water, gas, and public transportation, while also ending the universally subsidized ration book (libreta) for most products. New salary scales were introduced across all sectors, and the tax code was overhauled with the implementation of a new Law on Tax System to increase state revenue from the growing non-state sector.

Implementation and timeline

Announced in 2020, the full implementation began abruptly on January 1, 2021, after a brief public information campaign. The first phase focused on the currency unification and the initial wave of price adjustments for utilities and services. Subsequent stages saw the gradual application of increased prices for goods and the rollout of the new salary and pension scales across different provinces and sectors. The implementation has been neither linear nor uniform, with the government, including the Ministry of Finance and Prices, announcing periodic adjustments and pauses in response to runaway inflation and public discontent, particularly following events like the 2021 Cuban protests.

Economic and social impact

The immediate impact was a surge in inflation, estimated by experts to exceed 500% annually, which rapidly eroded the value of the increased wages and savings. The cost of living soared, severely affecting vulnerable populations and contributing to widespread shortages of food and medicine. While the state subsidy burden decreased, the economic contraction deepened, with negative effects on gross domestic product growth. Socially, the reforms exacerbated inequalities and fueled unprecedented social unrest, notably the nationwide 2021 Cuban protests in July. The reforms also accelerated the dollarization of the economy, as the population sought stable currencies like the U.S. dollar and the euro.

Criticisms and challenges

The plan has faced intense criticism from economists, citizens, and even within the Communist Party of Cuba. A major critique is that the wage increases were vastly insufficient to cover the hyperinflation triggered by the reforms, leading to a severe decline in real income. The implementation is widely viewed as poorly sequenced and executed without adequate safeguards or a coherent social protection matrix. External challenges include the persistent United States embargo against Cuba, the pandemic's impact on tourism, and global economic instability. Internally, bureaucratic resistance, lack of productive response from state enterprises, and the growth of a precarious informal economy present significant obstacles to the reform's success.

Category:Economy of Cuba Category:2020 in Cuba Category:2021 in Cuba