Cuban government approves measures to boost the economy

ACN | Friday, 28 June 2019 | Click here for original article

HAVANA, Cuba, Jun 28 (ACN) The Council of Ministers approved a set of measures to boost the economy, including an increase in salaries in the budgeted sector and also pensions, which will benefit more than 2.75 million people.

The Council of Ministers, headed by its President, Miguel Díaz-Canel Bermúdez, approved several measures in order to promote an economic strategy based on the maximum use of the country's internal capacities and human potential.

The president explained that during the visits to the provinces, the states of opinion of the population, proposals in congresses such as that of the Workers Confederation of Cuba and attending to the problems faced by our economy, aggravated by the hostile policy of the Government of the United States, for some months a working group - where academics of economic sciences also participated - systematically debated the decisions now approved by the highest governing body of the country.

The Minister of Economy and Planning, Alejandro Gil Fernández, expressed that in general the measures "are focused on giving a greater response to the needs of the population and the economy, encouraging the active participation of all actors in the search for solutions and in confronting the economic siege imposed on us by the Government of the United States".

The purpose is that what has been designed, in addition to stimulating savings, will promote development and allow us to continue advancing in the fundamental issues that generate the most favourable conditions for the Cuban economy to develop.

He commented that the measures seek, essentially, to defend national production; diversify and increase exports; substitute imports; promote productive chains; strengthen the state enterprise; advance in food sovereignty; promote local development; comply with the Housing Policy; and put science in function of solving problems.

All of this," he stressed, "requires the use of working methods and styles that are alien to formalism and bureaucracy and with an integral approach, which will contribute to making the decisions adopted by the Government more effective.

Gil Fernández explained that the measures, which will be implemented gradually, cover dissimilar aspects such as the increase in national production, municipal self-sufficiency, local development projects, investments, retail trade circulation and the promotion of agricultural production.

He considered of fundamental importance the role and preparation required by the cadres at all levels. At the same time, he pointed out that it is essential, "to concretize the changes that correspond in the institutionality of the country, since modifications have been made to the economic model and basically we continue working with the same structures of the institutions".


"It's not the final salary increase we're going to have, but it's quite significant for the conditions we're in," stressed the President of the Councils of State and Ministers when referring to the salary increase in the budgeted sector.

The purpose is -he assured- that this decision begins to be applied in the salary corresponding to the month of July, so that before the end of the summer the workers receive the first benefits.
In this regard, the Minister of Economy and Planning said that for the budgeted sector the minimum wage is increased to 400 pesos and the average monthly wage per worker then rises to 1,067.

"This measure includes 1,470,736 workers from the Central State Administration agencies, local People's Power bodies, organizations and associations, and has an estimated annual cost of 7.5 billion pesos.

In the case of Social Security, taking into account the increases made in November 2018 to the minimum pension, it remains at 242 pesos. The rest of the people who at that time did not receive any increase and receive pensions of less than 500 pesos, will now benefit from the approval of the new measures, which favors 1,281,523 people, with an estimated annual cost of 700 million pesos.

Meanwhile, Social Assistance will have no changes, taking into account the increase made in November 2018, when the minimum amount was set at 217 pesos.

The Minister of Finance and Prices, Meisi Bolaños Weiss, also explained that the application of the Special Contribution to Social Security will be generalized to workers in the budgeted sector, as part of the principle that we all contribute to the financing of the expenses that support the benefits for this concept. "The tax rate will be 2.5% for those who earn up to 500 pesos a month and 5% for those who earn more than 500 pesos a month.

It was also specified that the expenses for this wage increase should not increase the deficit of the State Budget approved for 2019. In this sense, it is essential to apply savings measures and exercise strict control of expenditures, both budgeted and unbudgeted activity, as well as collect all revenues generated, taking into account the potentialities and reserves still present in the economy.

Regarding the business sector, the Minister of Economy and Planning recalled that in 2014 the approval of performance-based payment systems was decentralized, wage formation and distribution were linked to compliance with indicators, and administrative restrictions were eliminated. Because of this, he said, the average salary increased from 600 to 871 pesos at the end of 2018.

Despite the positive impacts of these measures, said the Ministers, difficulties persist. As a result, the Council of Ministers approved perfecting the mechanism for the payment of wages in the business sector, maintaining the link with production results, which will be implemented from 2020.
Among the incentives, she highlighted granting the power to approve payment systems to the director of the company; prioritizing whenever possible the application of piece-rate payment; and maintaining as an indicator that conditions the payment by results in companies the growth of profits before tax, compared with previous periods.

In order to avoid the inflationary effect of the measure, she stressed, the Ministry of Finance and Prices will provide the necessary mechanisms throughout the economy to mitigate possible price increases.

In that sense, the Cuban President indicated that the ministries involved have to establish observation mechanisms to be aware of prices and where consumption is moving, "thus giving us time to rectify any element and prevent inflation.

He also called for stimulating, for example, the sale of food, construction materials, tourist packages and offers from the Cuban Telecommunications Company, ETECSA. In short, let's all think about new options, he said.

Diaz-Canel called attention to the need to be rational in completing the payrolls. The one that is going to be used, he pointed out, has to be the one that is going to perform the most, because the measure is not to throw the money away; it is to stimulate the one that works and contributes the most.

Likewise, he insisted that from now on it is urgent to prepare the cadres well in order to avoid erroneous interpretations and to give a systematic follow-up to the behavior of these subjects.
The intention of the group of measures -reflected- is to promote the development of the country and to face the complex situation of the present times. All of them will not be implemented immediately, as they require more analysis and work.

In the coming days, through the different media our population will receive more detailed information on the scope of these decisions.

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