Economic Reform in Cuba started in 1993 to accelerate the economic growth.
Reasons Behind the reform:
After the fall of the wall in 1989, the Cuban economic growth was decreasing.
The sudden breakdown of the European socialist block had a negative effect on the macroeconomic indicators of Cuba.
The budget deficit went high, and therefore the rate of inflation also increased.
Problems regarding unemployment was increasing gradually.
The government introduced a policy for macroeconomic adjustment to make the necessary corrections of some key imbalances including rapid spending cuts for armed forces and formation of an uncompromising fiscal discipline. The goal of the monetary policy measures was to control the inflation and stabilizing the economic conditions.
The structural reform had been implemented in the second stage. Through this reform the government reoriented and decentralized foreign trade and opened the market for foreign investment. Banking systems had been restructured and so was the case for the state enterprise system.
More stress was given on the development of medical infrastructure.
Development had been started in some sectoral programs, for example, biotechnology, oil & gas , tourism and food self sufficiency.
The government of Cuba allowed the circulation of the US dollars in the country. Moreover, dollar remittances were also declared as legal.
Results of the Economic Reform in Cuba:
During the period 1994 – 2000, the Gross Domestic Product in Cuba secured an annual growth rate of 4.3%.
The economic growth of the country took a significant positive move. During the period 2001 – 2006 the average economic growth rate of Cuba was 6.3%.
The budget deficit had been reduced through this reform and the employment rate increased as well.
Last Updated on : 26th June 2013