Financial Sector Reform in Cuba

Financial Sector Reform in Cuba had been adopted to achieve economic revitalization. Growth in the financial sector was not steady in Cuba, and capital flows were inadequate in the most prolific sectors of the economy. The Cuban government announced that socialism would not be stopped. Therefore to improve the economic situations in Cuba, the government implemented financial sector reform in that country.

Reform Process:

• Formation of Financial Rules and Guidelines: The Cuban government introduced some rules to enhance the process of resource allocation. Those rules were made transparent to achieve clarity. Those laws forced the state enterprises to submit their income statement to eae out the imposition of taxes.

  The Ministry of Finance depended completely on the enterprise disclosures and banks. So there was a chance of tax evasion and false accounting. Moreover, most of the tax examiners in Cuba had inadequate loan appraisal capabilities. So a lot of attention had been given by the government on these problems.

  Another step to reform was the formation of some uniform accounting guidelines in 1995. In this year, Cuba issued an annual income statement, which featured the strength of the National Bank of Cuba, to the international community.

• Improvement of the Financial Sector’s Efficiency: The Cuban government made an effort to improve and modernize the efficiency of the financial sector. The government further enhanced this program by taking the initiative to improve the technical and professional capacity of all the staffs. It was a tough task for the government to train and develop all the bankers, accountants, managers, financial analysts and auditors of the future. But the government did perform well, that is why, almost 85 specialists was trained within 1995, and for 1996 that figure was more than 350.
• De monopolization: The government of Cuba started the de monopolization technique in the tourism sector. However, other economic sectors had been dominated by few industrial interests. Therefore, the government wanted to demonopolize these sectors to change the sectors to increase market competition. Banking sectors had also been taken under the de monopolization program.

The government had set a legal framework that abstained the state banks from heading the state owned enterprises. Several laws had been formed to stop unfair competition and predatory pricing. Several private capital market had been established where the cooperatives and private enterprises were able to access credit.