Cuba approves historic economic reforms: opens economy to private capital, slashes state jobs

Cuban communists on Thursday approved the most sweeping economic reforms in decades, opening the island’s economy to private capital, slashing state payrolls and pledging to end chronic shortages under a package backed by President Miguel Díaz-Canel and former leader Raúl Castro. The vote in the National Assembly, convened in Havana on 18 June 2026, marks the first time since the 1959 revolution that Cuba’s ruling party has formally endorsed wholesale liberalisation measures, according to a report by Aktuality.sk .

Lawmakers endorsed a raft of measures that will allow foreign and domestic private investors to operate in sectors previously reserved for state monopolies, including retail, transport and small-scale manufacturing. The reforms also mandate the elimination of at least 200,000 public-sector jobs within twelve months, a move intended to reduce the state’s wage bill by an estimated 1.2 billion Cuban pesos annually. “This is not a retreat from socialism,” Díaz-Canel told deputies, “but a strategic retreat to save socialism.” The assembly simultaneously approved a constitutional amendment that removes the ban on private property in Article 22, clearing the way for the sale of state assets and the creation of a formal land market.

The announcement follows weeks of closed-door negotiations between the Communist Party, the military-run conglomerates that dominate Cuba’s economy, and representatives of the island’s emerging private sector. Reuters reported on Wednesday that the reforms had been drafted under the supervision of Raúl Castro, who remains a powerful figure in the party hierarchy despite stepping down as president in 2021 . The measures come as Cuba faces its worst economic crisis since the 1990s, with chronic fuel and food shortages exacerbated by tighter US sanctions and the collapse of Venezuelan oil subsidies.

Analysts warn that the success of the reforms hinges on the government’s ability to implement them without triggering social unrest. Cuba’s state payroll currently employs 2.8 million people, roughly half the country’s workforce, and the planned layoffs risk deepening poverty in a nation already struggling with inflation above 50 per cent. “The state cannot simply shed workers without creating alternatives,” said economist Pavel Vidal, a former Cuban central-bank adviser now at the Pontifical Xavierian University in Bogotá. “If private enterprise does not expand fast enough, the social cost could be severe.”

The reforms also include a pledge to end the island’s perennial shortages by allowing private wholesalers to import goods directly, bypassing the state distribution network that has long been blamed for bottlenecks. The government has promised to publish a detailed implementation timetable within thirty days, with the first wave of privatisations expected to begin in the fourth quarter of 2026.