Cuba has the largest fiscal deficit in the world, not counting Ukraine.

Cuba has the highest fiscal deficit in the world not counting Ukraine, according to a comparison with the latest report from the International Monetary Fund (IMF).

The regime itself said this week before the National Assembly of People’s Power that the island has an estimated deficit of 18.5% of its GDP for 2024, far above the rest of the countries and only behind Ukraine, which has a 30.3%.

Cuban economist Pedro Monreal explains that this deficit is, by a wide margin, greater than all the current deficits in the world, with the exception of Ukraine, which could be concerning to creditors and investors.

“Cuba’s deficit of 18.5% of the GDP more than doubles the international deficit of Algeria, the second largest after Ukraine. No other deficit reported by the IMF exceeded 8% of the GDP. Other conflict-afflicted countries (Russia, Niger, Sudan, Yemen) did not exceed 6.2%,” he clarified.

The data was presented by the Minister of Finance, Vladimir Regueiro Ale, before the National Assembly on December 18th, where he stated that for 2024 the fiscal deficit would have a maximum limit equivalent to 18.5% of the Gross Domestic Product, the second-highest percentage since the fall in 1993 due to the special period.

1/2 The deficit equivalent to 18.5% of Cuba’s GDP in 2024 is, by a wide margin, greater than all the current deficits in the world, with the exception of Ukraine. I suppose that in Cuba it is understood that this information is public and that creditors and investors will make conclusions pic.twitter.com/ykewhW9Zgs — Pedro Monreal (@pmmonreal) December 21, 2023

Several deputies intervened to point out that such a high deficit would translate into more inflation and an even greater deterioration of the population’s standard of living. In this respect, they called to review other potential sources of income and cost savings.

Monreal says that in this context it is worrying “whether the risk of debt and investment increases or decreases in a country that with two-digit inflation adopts a fiscal policy with the second largest deficit and with the usual practice of covering it with monetary liquidity.”

“Is it a rational economic decision?”, he questions.

“That deficit indicates an out-of-control macroeconomic policy,” emphasizes Monreal, who believes this situation could potentially cause disturbances of various kinds.

“The markets in CUP and foreign currencies do not function as ‘isolated quarters,’ even though the official economic superstition assumes this idea,” he explained.

Monreal also analyzes the regime’s budget proposal for 2024, and says that it potentially reduces to nothing all that has been said so far about macroeconomic stabilization in Cuba.

He points out that with a deficit estimated at 18.5% of the GDP, there would be no macrostabilization; yet official media have tried to omit this “galactic deficit”; because “it indicates that reducing inflation is not a ministerial priority.”

Another economist, Josué Portal, considered that this situation might not deter investors, but it could enable the regime to resort to national resources to alleviate its debt. He explains that with these national resources debt has been “paid without going through money.”

2/3 Cubadebate published today a note with lots of data about the budget 2024, but it does not mention the most important figure that was reported on December 18th in the work of commissions about an estimated deficit equivalent to 18.5% of the GDP pic.twitter.com/vc9DfXEj37 — Pedro Monreal (@pmmonreal) December 21, 2023

In the midst of this dark forecast, the Cuban regime announced a new package of measures with price increases and taxes on basic services such as water, gas, transportation, and energy, among others.

Speaking at the Second Ordinary Period of Sessions of the National Assembly of People’s Power, in its X Legislature, Cuban Prime Minister Manuel Marrero Cruz said that it is unsustainable for the country to continue subsidizing these services.

The rationing card was also eliminated, which represented the only source of access to foods with prices controlled by the vast majority of the island’s population.