Tarea Ordenamiento: la inflación minorista principal desviación.

Cuba: Retail inflation has been the main deviation of the Ordering Task; the costs of the reference basket of goods and services are almost double the numbers designed, while the purchasing power that the wage reform gave has been “greatly affected”, fundamentally in the lower-income sectors, Deputy Marino Murillo Jorge, Head of the Permanent Commission for Implementation and Development, said.

Meeting at the Havana Convention Center and via videoconference from all the provinces, the deputies learned of the results of the implementation of the monetary system that began on January 1 of this year, an analysis that took into account the execution of the economy until June, some performance indicators up to August and updated estimates of the main balance sheets of the economy.

Murillo Jorge recalled that a group of measures have been adopted to adjust, as anticipated, certain decisions due, among other things, to design problems and the implementation process of monetary and exchange rate unification, as well as deviations derived from the difficult context that the Cuban economy has experienced.

As of August, 256 decisions had been approved and counted (change in the electricity rate and the salary scale of the rum masters, for example) and 171 legal regulations had been issued.

Of the total, 234 decisions have been fulfilled, with 155 legal norms, while 10 are in process, nine are pending, two are unfulfilled and one was without effect.

Murillo Jorge appreciated that measuring the result of the Ordering Task, “is not to say whether it went well, badly or partially”, since it must be compared with the design of the measure to “have a more realistic idea of ​​how things have been in details.”.

For this year, he recalled, a wholesale inflation of 1,200 percent was designed. In January, prices grew 224 percent compared to December, in February 12 percent more, while in June against May it grew 6.53 percent, he exemplified.

This situation had to do with the increase in the cost sheet of the electricity and the tobacco company, according to the data presented.

Murillo Jorge announced that the expected adjustment in the economy of wholesale prices growing less than the devaluation level designed was achieved. “The problem is in the retail inflation, not in the wholesale one.”

The growth in prices of state-owned companies (222 percent inflation) is below design. “The inflation that has occurred wholesale in the business sector has been giving a return of 11 percent and that of foreign investment a 28 percent return.”

Murillo Jorge pointed out the existence of many deficiency problems, and argued that profitability should also be influenced by pricing policy.

Regarding the informal market, he said that it already has an inflation of 6,900 percent, influencing both the retailer and the wholesaler.

“It is an issue that must be managed. Imagine that an economic actor that obtains raw materials in the environment of state-owned companies and sets prices in the 1 × 70 environment, without being very efficient, is going to make great profits. This contributes to inflationary processes in the future”.

“The strategic objective of the ordering task was for national productions to be cheaper than imports. But if a price of 1 × 70 is formed, national productions would be more expensive”, he said.

How is this to be solved? The head of the Permanent Commission for Implementation and Development commented that it is been working by the Ministry of Finance and Prices, because “a wholesale price policy is necessary to manage these different exchange rates in the economy.”

In the business sector, he summed up, “there has not been a trigger for wholesale inflation,” an adjustment has been taking place, while accounting has become more transparent.

Regarding retail inflation, total sales were to grow 1.6 times and revenues five times, hence the retail inflation target would be 60 percent. “Retail prices were going to grow much less than income and under that decision the Ordinance Task and the salary reform were approved.”

While retail inflation behaves as designed, that “60 percent does not match what people are experiencing. People are living prices seven, 10 times higher”.

This index, he explained, is based on state prices, “but when you add the levels of the informal market, inflation would be much higher.”

However, he indicated that the prices of transportation and housing services and food have growths much higher than the 60% designed.

Murillo Jorge said that the basket of reference goods and services reaches its highest cost in Havana, with 3,250 pesos, and in the eastern provinces with 3,557, when its designed value was 1,528 pesos.

“The cost of the basket has been rising month by month and it has not been stopped,” he acknowledged.

On the other hand, food outside the home, calculated at around 400 pesos, is at 800.

Murillo Jorge commented that a group of anti-inflationary measures have been taken (garage sales, for example), but they have not had all the expected results.

Other effects of the monetary system

Regarding the retail mercantile circulation, the head of the Permanent Commission for Implementation and Development said that there is a supply deficit in the order of 60 billion. “This is what has triggered prices in the informal market and therefore the growth in the cost of the basket of goods and services.”

Revenues were expected to be 175 billion, and they are at 176 billion. “Offers fall but income is maintained.”

“When there is money in the economy there is almost always inflation, and the first thing to do is to control the money in the economy through fiscal policies.

“If we want there to be a monetary balance, the State has to collect 92 percent of the population’s income and eight percent goes between people. Where is the highest influence in this absorption capacity? It is in the state retail sales. Taxes are collected on non-state forms that are sold by the state”.

The latest estimate indicates that the State is only collecting 67.3 percent. “If all the money that was planned is not being collected, we have another phenomenon: the population is accumulating more money than it should have or is spending it on something else. We are going to have more money in the population than was anticipated. But that money is polarized. There is a group of people with a lot of money”.

Murillo Jorge summarized that there is less collection, which will cause that next year the cash in the hands of the population will be higher than designed, with polarized income.

On the other hand, Murillo Jorge warned about the effects of the partial dollarization of the economy, and added that the inconvertibility of the currency has increased. “If we want to fight against inflation, we will have to see how all these imbalances are harmonized.”

Among the results, he mentioned that it was possible to reduce subsidies and gratuities, while employment increased and the economy has managed to take other measures in the monetary environment.

He reiterated that retail inflation is higher than designed and has reduced the purchasing power of income, being the main criticism of the population.

“There are many possible solutions,” he said and mentioned, citing President Miguel Díaz-Canel, the need for greater participation by national producers, better control of liquidity in the hands of the population, and compensatory measures for the care of most vulnerable people.

Which has been the impact of the regulation on Cuban companies?

According to the head of the Permanent Commission for Implementation and Development, the information on the business system came from the financial statements presented to the ONEI and all the data are expressed in Cuban pesos with an exchange rate of 1 x 24.

The design of the Ordering Task, starting on January 1, coincides with the economy plan and the state budget.

The analysis, which took into account among other indicators, net sales and profits, included 1,872 business structures, OSDEs, 100 percent Cuban mercantile companies and all types of foreign investment, while 150 entities were left out due to inconsistencies with financial statements.

In the case of the agricultural sector, 13 organizations were included, Murillo Jorge specified and recalled that the design of the monetary system estimated that 30 percent of the companies closed with red numbers.

In the period studied, a group of companies closed with profits, while 458 presented losses, of which 164 from the agricultural sector (4 billion pesos), while losses in the non-agricultural sector are calculated at more than 2 billion pesos.

Of the reported losses of around 7 billion, 82 percent are concentrated in agricultural activity, Azcuba, provincial businesses, others subordinate to the territorial government, Gesime and in the GEIA.

With regard to the expenses for losses and shortages of goods (one thousand 609 million pesos), there is a concentration in MEDICuba S.A., associated with accounting errors, and in the Commerce and Gastronomy companies of Havana.

Murrillo Jorge highlighted as a positive aspect the decrease in the level of subsidy from the State budget to state companies, and underlined the decision to maintain consumption subsidies, mainly in commerce, for which 30 billion pesos were allocated.

He reported that the average salary in Cuba is 3,838 pesos, and the highest figures are in the OSDE (4 thousand 37 pesos per month).

The profitability taking into account the net sales of Cuba is 17 percent, the lowest is reported by the state sector with 9 percent, associated with price problems, excess workers indirect to production, among other causes.

Por Redacción digital

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