Cuban Economist Clarifies Pension Increase Details

Cuban economist Pedro Monreal shed light on several crucial aspects regarding the recently announced pension increase in Cuba. He pointed out that without a corresponding rise in the supply of goods, the purchasing power of pensioners will quickly diminish. Set to begin in September 2025, this increase will require an additional expenditure of 22 billion pesos annually. The announcement was confirmed by Prime Minister Manuel Marrero Cruz, who shared on X that the Minister of Finance and Prices, Vladimir Regueiro, will soon appear on television to discuss the measure's details and implementation.

Monreal highlighted that, although not officially explained, the relative "cost reduction" of social security spending compared to GDP has created a fiscal space that could finance the increase without causing new deficits. According to data presented at the National Assembly, the fiscal deficit by the end of the first semester was 29.2 billion pesos less than planned, potentially accommodating the 7.3 billion CUP cost of the measure from September to December 2025.

In a thread on his X account @pmmonreal, the economist raised four critical points that should be addressed by the authorities:

Key Considerations for Cuba's Pension Increase

1. Sustainability until 2025: Will the fiscal "leeway" continue throughout the year and into 2026 to support the increase without resorting to additional deficits?

2. Prospects for 2026: Is another pension adjustment planned for next year amid an official inflation rate of 15%, which underestimates the real price hikes?

3. Structural Reform of the System: Is there a plan to modify the current social security budget model, which has a structural deficit of 1 to 3% of GDP?

4. Protecting Purchasing Power: Will there be sporadic increases, or will an automatic adjustment mechanism be adopted to maintain the real value of pensions against inflation?

Although the increase doesn't involve direct monetary issuance, Monreal warned that injecting 22 billion pesos into aggregate demand could pressure prices, especially in an already supply-constrained domestic food market. This figure represents 60.8% of total state food sales in 2024, estimated at 36.2 billion CUP.

In this context, the expert cautioned that without an equivalent growth in the supply of goods, the purchasing power from the pension increase will erode rapidly, limiting its real impact on the lives of beneficiaries, particularly the island's retirees.

The decision, announced by Marrero during a live broadcast on Canal Caribe's YouTube channel, will benefit 1,324,599 people, accounting for 79% of the nation's pensioners. Of these, 82%—those earning up to 2,472 pesos—will receive an increase of 1,528 pesos, effectively doubling the minimum pension, currently received by 438,572 retirees, or 33.1% of the total.

The remaining 18% of beneficiaries will see their pensions raised as needed to reach 4,000 pesos per month, the limit set for this stage. While the measure will cover retirees due to age, disability, and unified pensions after a spouse's death, the high inflation levels mean it will not meet even the most basic needs of the retirees.