Cuban Economist Criticizes New Restrictions on Small and Medium Enterprises: "Adding Insult to Injury"

Prominent Cuban economist Pedro Monreal has spoken out against the recent resolution (56) by the Ministry of Domestic Trade. This directive revokes the retail trade license for small and medium enterprises (SMEs) that conduct it as a secondary activity. It also forces those whose primary activity is retail to form alliances with state entities to continue operations, which Monreal describes as a "blow to market relations" and a way to "discriminate against private activity."

Monreal, a vocal critic of the economic policies under the regime of Miguel Díaz-Canel, points out that this isn't a new decision, having been initially approved in August. "It's adding insult to injury," he remarked on the social media platform X, formerly known as Twitter, where he frequently shares his analyses.

According to Monreal, under the guise of organizing wholesale trade, Cuban authorities have implemented a resolution that outlines the execution of a measure they believe will allow SMEs to benefit from the state's experience, transportation, and infrastructure. However, they overlook the burdens of bureaucracy, inefficiency, and corruption—major weaknesses of a centralized economy with poorly compensated workers.

State Control and Market Dynamics

Monreal argues that by removing SMEs from wholesale trade, the Cuban government is aiming to kill several birds with one stone. The resolution seeks private currency to "re-monopolize the wholesale supply and reduce competitors." The goal, he adds, is for state-owned wholesale companies to increase market power and profitability.

"Resolution 56 turns non-state actors, who possess liquidity and flexibility and currently conduct most of the retail trade, into a large captive customer base for state wholesale companies—many of which lack currency and are inefficient," Monreal emphasizes.

The Broader Impact on the Economy

This move by the government, Monreal suggests, is intended to "revitalize" state-run wholesale trade by "strangling" the private sector. As a result, he argues, "the fallacy of equality" between economic actors is laid bare.

The economist highlights two crucial points ignored by the government: the effective functioning of a liquidity chain between private and state companies working with both foreign currency and national currency, and the belief that this measure will control inflation in a market characterized by high demand and low supply due to the island's chronic shortages.

Monreal warns of the risks in assuming that by keeping private companies captive, they won't choose to move their funds elsewhere. He also underscores the timing of the measure's implementation, noting, "There is an issue with the timing: a month when consumer goods demand typically rises and any additional shortage associated with 'experiments' could 'link' to greater social instability."

The warning is clear. This experiment could lead to protests in a country currently resembling a pressure cooker.