Cuban Official Acknowledges Economic Reforms Will Increase Inequalities

A scholar associated with the University of Havana candidly acknowledged on state television that the 176 economic reforms approved by the Cuban regime on June 18, 2026, will exacerbate social inequalities on the island. Such a direct admission is rare from a system official.

During a segment on the government-backed program "Cuadrando la Caja," Rafael Montejo, the director of the Center for Management Techniques Studies at the University of Havana, stated that these reforms will lead to increased disparities. He was joined by Ian Pedro Carbonell Karell, director of macroeconomic policies at the Central Bank of Cuba, and Carlos Miguel Pérez Reyes, a deputy and president of the commission on SMEs and Management Forms.

"These measures are going to create inequalities, and we must address and identify them. Some individuals will gain access to money and wealth, while others will not have the same opportunities. Thus, inequalities will not only exist but potentially grow," Montejo emphasized.

Deputy Pérez Reyes added a sharper perspective, declaring that social gaps are not a looming threat but a current reality: "Inequalities are already present. We don't need to implement these measures to witness inequalities; they are already here."

Statistics support this assessment. Cuba's Gini coefficient has risen from 0.25 in 1989 to between 0.4 and 0.5 today, as acknowledged by the government. For the first time since the 1960s, the private sector leads in retail sales, accounting for 55% of the total in 2024.

The 176 reforms, passed in a special session by the National Assembly, include removing the cap of 100 workers for private businesses, authorizing private banks and non-state exchange houses, opening private sectors to foreign direct investment, and limiting the subsidized basic basket to retirees and vulnerable individuals, ending the universal subsidy established in 1962.

Montejo did not shy away from the contradictions inherent in the process: "You cannot radically change how the economy is managed without expecting social consequences. These will occur, and we must anticipate them."

Regarding the complexity of implementation, he warned that "there are no magic wands in economics" and that the main risk lies in executing the changes.

Pérez Reyes noted that the reform necessitates altering 81 higher-ranking norms and thousands of regulatory clauses amid "significant American pressure on the Cuban economy."

Central Bank official Carbonell Karell defended moving away from universal egalitarianism, arguing that "for many years, we protected everyone equally, and by doing so, when the material base to do so decreased, we ended up protecting those who need it most less."

The backdrop for these statements is bleak. The Economic Commission for Latin America and the Caribbean (ECLAC) forecasts a 6.5% contraction of the Cuban GDP in 2026, with a cumulative shrinkage of 10.3% over 2025-2026.

Nearly 89% of Cuban families live in extreme poverty, power outages range from 20 to 40 hours daily in some areas, and the annual inflation rate reached 13.42% in March 2026.

Despite these challenges, Montejo insisted that the ideological path remains unchanged: "I believe we will continue building socialism, just with different tools and instruments."

Pérez Reyes admitted that these reforms were overdue: "We should have taken these initiatives long ago. It has been difficult due to a lack of consensus. The current context forced us to accelerate our pace more than we would have liked."