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Economy

The Cuban state asserts its adherence to socialist principles in organizing its largely state-controlled planned economy. Most of the means of production are owned and run by the government and most of the labor force is employed by the state. Recent years have seen a trend toward more private sector employment. By 2006, public sector employment was 78% and private sector 22%, compared to 91.8% to 8.2% in 1981. Government spending is 78.1% of GDP. Since the early 2010s, following the initial market reforms, it has become popular to describe the economy as being, or moving toward, market socialism. Any firm that hires a Cuban must pay the Cuban government, which in turn pays the employee in Cuban pesos. The average monthly wage as of July 2013 was 466 Cuban pesos —about US$19. However, after a reform in January 2021, the minimum wage is about 2100 CUP (US$18) and the median wage is about 4000 CUP (US$33).

Cuba had Cuban pesos (CUP) set at par with the US dollar before 1959. Every Cuban household has a ration book (known as libreta) entitling it to a monthly supply of food and other staples, which are provided at nominal cost.

According to the Havana Consulting Group, in 2014, remittances to Cuba amounted to US$3,129 million, the seventh highest in Latin America. In 2019, remittances had grown to US$6,616 million, but dropped down to US$1,967 million in 2020, due to the COVID-19 pandemic. The pandemic has also devastated Cuba's tourist industry, which along with a tightening of U.S. sanctions, has led to large increase in emigration among younger working-age Cubans. It has been described as a crisis that is "threatening the stability" of Cuba, which "already has one of the hemisphere’s oldest populations". According to a controversial 2023 report by the Cuban Observatory of Human Rights (OCDH), 88% of Cuban citizens live in extreme poverty. The report stated that Cubans were concerned about food security and the difficulty in acquiring basic goods.

According to the World Bank, Cuba's GDP per capita was $9,500 as of 2020. But according to the CIA World Factbook, it was $12,300 as of 2016. The United Nations Development Programme gave Cuba a Human Development Index (HDI) of 0.764 in 2021. The same United Nations agency estimated the country's Multidimensional Poverty Index of 0.003 in 2023.

In 2005, Cuba had exports of US$2.4 billion, ranking 114 of 226 world countries, and imports of US$6.9 billion, ranking 87 of 226 countries. Its major export partners are Canada 17.7%, China 16.9%, Venezuela 12.5%, Netherlands 9%, and Spain 5.9% (2012). Cuba's major exports are sugar, nickel, tobacco, fish, medical products, citrus fruits, and coffee; imports include food, fuel, clothing, and machinery. Cuba presently holds debt in an amount estimated at $13 billion, approximately 38% of GDP.

According to The Heritage Foundation, Cuba is dependent on credit accounts that rotate from country to country. Cuba's prior 35% supply of the world's export market for sugar has declined to 10% due to a variety of factors, including a global sugar commodity price drop that made Cuba less competitive on world markets. It was announced in 2008 that wage caps would be abandoned to improve the nation's productivity.

Cuba's leadership has called for reforms in the country's agricultural system. In 2008, Raúl Castro began enacting agrarian reforms to boost food production, as at that time 80% of food was imported. The reforms aim to expand land use and increase efficiency. Venezuela supplies Cuba with an estimated 110,000 barrels (17,000 m) of oil per day in exchange for money and the services of some 44,000 Cubans, most of them medical personnel, in Venezuela.

In 2010, Cubans were allowed to build their own houses. According to Raúl Castro, they could now improve their houses, but the government would not endorse these new houses or improvements. There is virtually no homelessness in Cuba, and 85% of Cubans own their homes and pay no property taxes or mortgage interest. Mortgage payments may not exceed 10% of a household's combined income..

On 2 August 2011, The New York Times reported that Cuba reaffirmed its intent to legalize "buying and selling" of private property before the year's end. According to experts, the private sale of property could "transform Cuba more than any of the economic reforms announced by President Raúl Castro's government". It would cut more than one million state jobs, including party bureaucrats who resist the changes. The reforms created what some call "New Cuban Economy". In October 2013, Raúl said he intended to merge the two currencies, but as of August 2016, the dual currency system remains in force.

In 2016, the Miami Herald wrote, "... about 27 percent of Cubans earn under $50 per month; 34 percent earn the equivalent of $50 to $100 per month; and 20 percent earn $101 to $200. Twelve percent reported earning $201 to $500 a month; and almost 4 percent said their monthly earnings topped $500, including 1.5 percent who said they earned more than $1,000."

In May 2019, Cuba imposed rationing of staples such as chicken, eggs, rice, beans, soap and other basic goods. (Some two-thirds of food in the country is imported.) A spokesperson blamed the increased U.S. trade embargo although economists believe that an equally important problem is the massive decline of aid from Venezuela and the failure of Cuba's state-run oil company which had subsidized fuel costs.

In June 2019, the government announced an increase in public sector wages of about 300%, specifically for teachers and health personnel. In October, the government allowed stores to purchase house equipment and similar items, using international currency, and send it to Cuba by emigration. The leaders of the government recognized that the new measures were unpopular but necessary to contain the capital flight to other countries as Panamá where Cuban citizens traveled and imported items to resell on the island. Other measures included allowing private companies to export and import, through state companies, resources to produce products and services in Cuba.

On January 1, 2021, Cuba's dual currency system was formally ended, and the convertible Cuban peso (CUC) was phased out, leaving the Cuban peso (CUP) as the country's sole currency unit. Cuban citizens had until June 2021 to exchange their CUCs. However, this devalued the Cuban peso and caused economic problems for people who had been previously paid in CUCs, particularly workers in the tourism industry. Also, in February, the government dictated new measures to the private sector, with prohibitions for only 124 activities, in areas like national security, health and educational services. The wages were increased again, between 4 and 9 times, for all the sectors. Also, new facilities were allowed to the state companies, with much more autonomy.

The first problem with the new reform, in terms of public opinion, were electricity prices, but that was amended quickly. Other measures corrected were in the prices for private farmers. In July 2020, Cuba opened new stores accepting only foreign currency while simultaneously eliminating a special tax on the U.S. dollar to combat an economic crisis arising initially due to economic sanctions imposed by the Trump administration, then later worsened by a lack of tourism during the coronavirus pandemic. These economic sanctions have since been sustained by the Biden administration.