Fines for Violating Price Caps Could Exceed 8,000 Pesos

The Cuban government will impose fines that could surpass 8,000 pesos on private businesses that fail to comply with the recently implemented price caps on six high-demand essential products.

Government Crackdown on Price Violations

Just two days after the Ministry of Finance and Prices' Resolution 225/2024, which set retail prices for chicken cuts, edible oils (excluding olive oil), powdered milk, pasta, sausages, and powdered detergent, the regime launched a nationwide control operation to detect price violations and penalize offenders.

Vladimir Regueiro Ale, Minister of Finance and Prices, reported on the main news broadcast of Cuban state television that 1,079 "control actions" were carried out, resulting in fines or warnings for 393 price violations. Regueiro stated that measures were taken in all cases, with fines reaching "up to 8,000 pesos."

Although he mentioned that in some instances, the sanctions were "warnings, depending on the severity of the infractions," he admitted that in most cases, the fines established by Decree-Law 30 of 2021 were applied. The amounts could even exceed 8,000 pesos, as the minister acknowledged that this sum might be "low" for some private business owners.

"We know there is a range of incomes in this sector, and for some, this fine may indeed be low," argued the regime official, who cited the three-year-old regulation to justify the punitive measures, suggesting that fines could be higher depending on the severity of the violations. "All of this is based on legal grounds, studied and trained," he insisted.

Enforcement Actions in Havana

Regueiro noted that in Havana, where "there is greater dynamism in non-state forms of management and the commercialization of these products," 183 inspection actions were carried out, six of them based on citizen complaints, detecting a 75% violation rate. One establishment was temporarily shut down until it regularizes its accounting controls and storage conditions. Inspectors also enforced 12 "forced sales," meaning products had to be sold at the established prices.

According to the minister, non-state entity owners - self-employed workers, micro, small, and medium-sized enterprises (mipymes) and non-agricultural cooperatives - have been trained on pricing matters. Still, he warned that "we must generate this perception that all of this requires control, and with the commitment we have to the population, which is the main purpose of this measure, we will take appropriate actions."

While capping retail prices for six essential products, the Cuban government also eliminated customs duties on imports of these items to mitigate the impact of inflation on consumers. A profit margin of up to 30% over costs and expenses was established, provided that prices do not exceed those defined in the resolution's annex. The regulation clarifies that setting these maximum prices does not justify raising current prices if they are already lower.

Earlier this month, the Cuban government announced a force of 7,000 inspectors to enforce the price caps.

Criticism from Entrepreneurs and Economists

Entrepreneurs and mipymes directors expressed dissatisfaction with the government's policies to curb inflation. "If they want essential products to keep coming in, this is not the way," warned one entrepreneur about the decision to cap prices on six basic products sold by the private sector.

In analyzing the potential consequences of implementing these measures, renowned Cuban economist Pedro Monreal argued that "instead of using the market to flexibly 'plan,' they numb the market with the plan." Monreal contended that this is not just about insisting on establishing the traditionally applied, ineffective "price caps" on agricultural products but forcing national private companies to adopt the Soviet method of price formation.

Meanwhile, Food Monitor Program, a program monitoring and denouncing food (in)security in Cuba, warned that the recent government measure to cap food prices could increase shortages and the black market in the country. Experts expressed concern that this "unilateral" measure could affect the private sector, disincentivize investments, create more shortages, and amplify the black market.