Cuba 2026: Currency Collapse, Blackouts, and the Demographic Drain

Tarea Ordenamiento and the parallel rate that ate the reform #

Tarea Ordenamiento (the Ordering Task) took effect on January 1, 2021 by Council of State decrees published in Gaceta Oficial Extraordinaria No. 68. The package retired the convertible peso (CUC) at a one-to-one exchange against the Cuban peso (CUP), unified the official commercial rate at 24 CUP per dollar (a 2,300 percent devaluation from the prior 1 to 1 state-enterprise rate), lifted regulated prices on electricity, transport, and basic foods by factors of three to ten, and announced a phased elimination of the libreta ration book. The stated objective was to compress relative price distortions, recapitalize state enterprise balance sheets, and align wages with productivity. The Ministry of Finance and Prices projected one-year inflation between 60 and 160 percent and a real GDP rebound of 6 to 7 percent in 2021.

The reform missed on every dimension. ONEI inflation registered 77.3 percent in 2021, then 39.1 percent in 2022, with the household basket running materially higher. Real GDP contracted 10.9 percent in 2020 (COVID shutdown), recovered 1.3 percent in 2021, contracted 1.9 percent in 2023, and contracted between 1.9 and 4 percent in 2024 by ONEI preliminary and IMF Article IV proxy estimates. The official 24 CUP rate survives only for selected state-enterprise imports and partial wage settlements. The Banco Central de Cuba opened a retail window at 120 CUP per dollar in August 2022, intended as a controlled devaluation, but the spread to the household informal rate widened rather than closed. The El Toque parallel rate tracker, published daily from a Madrid base, registered 380 CUP per dollar in late April 2026, against 110 in January 2023 and 24 nominally official. The MLC (moneda libremente convertible) hard-currency store circuit, introduced in 2019 to capture remittance dollars, has degraded into rationed shelves and 25 percent shrinkage on imported staples, per Reuters Havana reporting. The state effectively runs three rates and one black market, the textbook signature of a failed unification.

Sugar, tourism, remittances, and the goods balance that no longer balances #

Cuba's tradable base has hollowed out across all four pillars. Sugar, historically the export anchor, produced 270 thousand tonnes in the 2022 to 2023 zafra and approximately 350 thousand tonnes in 2023 to 2024 per AZCUBA, against a mid-1990s peak above 2.4 million tonnes and a 2017 to 2018 outturn of 1.1 million. The 2024 to 2025 zafra (campaign closing in mid-2025) was reported by AZCUBA at roughly 165 thousand tonnes, the lowest harvest since 1898, with 14 of 56 mills idle on fuel and machinery shortages. Cuba moved from the world's largest sugar exporter for most of the 20th century to a net sugar importer in 2023.

Tourism, the post-Soviet replacement engine, peaked at 4.7 million arrivals in 2018, fell to 1.6 million in 2022, and recovered to 2.4 million in 2023 and roughly 2.2 million in 2024 (ONEI Anuario Estadistico). Canadian arrivals, the largest single market, declined 14 percent year-on-year in Q1 2026 on social media reporting of blackouts and food shortages at all-inclusive resorts. Russian charter flow, briefly a partial offset in 2023, contracted on ruble depreciation and Aeroflot route cuts. Remittances, the de facto household balance of payments, ran around 3.7 billion dollars in 2019 by Havana Consulting Group, fell to roughly 1.0 billion in formal channels by 2023 after Western Union closures and OFAC restrictions on Fincimex routing, and migrated to informal mule and crypto channels that bypass the MLC system entirely. The goods balance posted a deficit of 8.4 billion dollars in 2023 on ONEI external trade, against goods exports of 1.7 billion.

The August 2024 nationwide blackout and the thermoelectric crisis #

On October 18, 2024 (the rolling crisis that began with the August 2024 grid stress), the Antonio Guiteras thermoelectric in Matanzas tripped offline at 11:00 local time, taking the Sistema Electroenergetico Nacional with it. All eight thermoelectric plants disconnected within minutes. Power was restored to Havana intermittently after 72 hours, and full island restoration took five days. Hurricane Oscar made landfall on October 20 during the recovery window, compounding the outage in Guantanamo and Holguin. A second nationwide blackout occurred in November 2024, and a third in March 2025. Daily rolling blackouts of 8 to 20 hours have been the rule for most of 2024 and 2025, per Union Electrica de Cuba (UNE) daily bulletins.

The Cuban thermoelectric fleet was largely commissioned between 1980 and 1991 with Soviet boilers and Czech turbines. The eight plants (Antonio Guiteras, Maximo Gomez Mariel, Otto Parellada Havana, Ernesto Che Guevara Santa Cruz, Antonio Maceo Renteria Santiago, Carlos Manuel de Cespedes Cienfuegos, Diez de Octubre Nuevitas, and Jose Marti Tallapiedra) deliver a nameplate roughly 2,600 megawatts but average dispatched capacity in 2025 fell below 1,400 megawatts on combustion equipment failures. Peak demand sits near 3,400 megawatts. The deficit has averaged 1,200 to 1,800 megawatts during evening peaks. Russian crude shipments, the historical fuel base, have declined materially since the 2022 Ukraine invasion redirected Russian oil flows to discount Asian buyers (India and China). Venezuela's PDVSA shipments have stabilized near 50,000 barrels per day, against the 2012 Chavez-era peak above 100,000. Mexican crude shipments, agreed under Lopez Obrador in 2023 and continued by Sheinbaum, run at roughly 30,000 barrels per day, insufficient to close the gap. Chinese and Turkish floating power barges (Karpowership) leased through 2024 added roughly 250 megawatts but were partly demobilized in 2025 on payment arrears.

Migration: 750 thousand Cubans walked to the United States #

Between October 1, 2021 (start of FY2022) and September 30, 2024 (end of FY2024), United States Customs and Border Protection recorded approximately 750 thousand encounters with Cuban nationals at the southwestern land border and at maritime interdictions, per CBP nationwide encounters data. This is the largest Cuban exodus in absolute terms since the 1959 revolution, exceeding the 1980 Mariel boatlift (roughly 125 thousand) and the 1994 balsero crisis (roughly 35 thousand) by an order of magnitude. The 2022 cohort alone (roughly 220 thousand) implied a 2 percent population shock to a country whose ONEI 2023 census placed resident population at 9.75 million, sharply down from the 11.18 million of the 2012 census.

The route shifted in 2022 from Florida Straits maritime crossings (Coast Guard interdictions averaged 5 to 7 thousand annually) to Nicaragua-Mexico land transit, after Managua dropped visa requirements for Cubans in November 2021. The Biden administration's CHNV humanitarian parole program, launched in January 2023 for Cuba, Haiti, Nicaragua, and Venezuela, processed approximately 110 thousand Cuban parolees through 2024 with a US-based sponsor requirement. The Trump second administration suspended CHNV by executive order on January 20, 2025, and Department of Homeland Security guidance issued February 2025 began the formal termination of existing parole status. Out-migration in 2025 partially substituted toward irregular maritime and Darien-routed flows.

Trump, Rubio, and the second-term Cuba reset #

The Trump second administration took office on January 20, 2025 with Marco Rubio confirmed as the 72nd United States Secretary of State on January 21, 2025. Rubio, a Cuban-American Republican from Florida, has historically advocated maximum-pressure sanctions on Havana, Caracas, and Managua. The early policy actions reversed the Biden adjustments. On January 14, 2025, the outgoing Biden administration removed Cuba from the State Sponsors of Terrorism list under a prisoner-release understanding mediated by the Catholic Church. On January 20, 2025, Trump executive action reinstated the SST designation. OFAC issued tightened guidance on hotels owned by GAESA (the Grupo de Administracion Empresarial), the holding of the Cuban Revolutionary Armed Forces that controls roughly 60 percent of tourism receipts, and revived the Cuba Restricted List that bars US travel transactions with state-affiliated entities.

The transition in Havana ran in parallel. Miguel Diaz-Canel, in office since April 2018 as President and First Secretary of the Communist Party since April 2021, presides over a generational shift in the broader leadership. Manuel Marrero Cruz remains Prime Minister. Power has consolidated around the GAESA technocratic axis (succession from Raul Castro's son-in-law Luis Alberto Rodriguez Lopez-Callejas, who died in July 2022, to a younger officer cohort). Lopez Obrador's Cuban-doctor program, formalized through Mexico's IMSS-Bienestar, contracted roughly 3,500 Cuban medical professionals to underserved Mexican states between 2022 and 2024, generating a partial dollar revenue stream for Havana under bilateral arrangements that survive into the Sheinbaum administration. The Trump administration has signaled OFAC scrutiny of these triangulation flows, but enforcement against the Mexican government counterparty is politically constrained.

MIPYME private sector and the 2026 outlook (a Sisyphus reading) #

The single counter-narrative is the formal small and medium private sector. Decree-Law 46 and Decree-Law 47 of August 2021 legalized the micro, small, and medium enterprise (MIPYME) and created a registry under the Ministry of Economy and Planning. By Q1 2026 roughly 12,500 MIPYMEs were registered, employing on the order of 320 thousand workers, dominated by food import and distribution, gastronomy, transport, and light manufacturing. MIPYMEs source roughly 35 to 50 percent of household consumer goods through Mariel SEZ import channels, often at retail prices indexed to the El Toque parallel rate. The Mariel Special Economic Zone itself, launched in 2014 under Decree-Law 313 with anchor Brazilian financing, hosts 71 approved users by ZED Mariel data, but utilization remains roughly one third of installed warehouse and dock capacity, with Brazilian sponsor BNDES exposure long since written down.

The MIPYME sector is structurally constrained by the FX architecture. Owners cannot hold foreign currency accounts on terms that match import obligations, and OFAC's GAESA-related sanctions complicate correspondent banking. The 2026 outlook reads through three vectors. The base case is further GDP contraction of 2 to 3 percent, parallel rate drift toward 450 to 500 CUP per dollar, sub-2.0 million tourist arrivals, and continued blackouts averaging 10 hours daily across the eastern provinces. The downside is an acute fuel disruption that triggers a fourth nationwide blackout, food riots on the scale of the July 11, 2021 protests, and a renewed migration wave constrained only by US enforcement at the Mexican border. The upside requires sequenced unification of the official rate to the household parallel rate, MIPYME formalization to 25 thousand firms, partial restoration of hydrocarbon supply, and a tourism rebound to 3 million. The Sisyphus reading applies cleanly: Cuba is rolling the same currency reform stone uphill that the 1993 to 1995, 2004, and 2013 to 2015 attempts each rolled up. The boulder rolled down each time when the central bank fixed the rate without first fixing the productive base. The 2026 setup is identical, with one new exogenous factor: the demographic base that absorbed prior reform shocks has emigrated.

Sources #

• Anuario Estadistico de Cuba 2023, Capitulo 5 Cuentas Nacionales y Capitulo 15 Turismo
• Tasa Representativa del Mercado Informal de Divisas en Cuba
• Nationwide Encounters, Custody and Transfer Statistics, FY2020 through FY2024
• Cuba Sanctions Program and Cuban Assets Control Regulations, Rescission of Removal from State Sponsors of Terrorism
• Cuba grid collapses, plunging island into blackout (Antonio Guiteras trip), and follow-on coverage
• Zafra Azucarera 2023 to 2024 y 2024 to 2025, balance preliminar
• Tarea Ordenamiento, Gaceta Oficial Extraordinaria No. 68 de 2020 y normativas complementarias
• Western Hemisphere Regional Economic Outlook and Article IV Proxies for Cuba
• Informe sobre el Sistema Electroenergetico Nacional, partes diarios
• Registro de Micro, Pequenas y Medianas Empresas, balance trimestral
• Cuba coverage, second Trump administration sanctions reset and Rubio Department of State actions
• Cuban Migration Cycles and Remittances, longitudinal analysis