Cuba's Special Period: The Crisis After the Soviet Collapse

By D. R. Ashworth · November 24, 2024 · Updated October 17, 2026 · 3 min read

• Cuba
• Planned Economies
• Famines

When the Soviet Union and its allies collapsed, Cuba lost the economic system that had sustained it. Between 1989 and 1993 Cuba’s GDP fell by nearly 35 percent and its imports by 75 percent (Rodríguez García). The average Cuban’s daily food energy fell from 2,899 to 1,863 calories, a drop sustained for almost five years (Franco et al.). The government called the crisis the “Special Period in Time of Peace”. It revealed how completely Castro’s planned economy had depended on Soviet support — and it eased only when the state allowed some of the market activity it had spent thirty years suppressing.

A dependent economy

Before the collapse, the socialist countries had supplied about 85 percent of Cuba’s imports and 80 percent of its investment, and bought about 80 percent of its exports. When the European socialist states fell and the Soviet Union dissolved, that support was lost (Rodríguez García).

Cuban economists also point to the tightening of the U.S. embargo by the Torricelli Act of 1992 and the Helms-Burton Act of 1996 (Rodríguez García). But the scale of the collapse came from the loss of the Soviet bloc, on which the island’s entire economy had been built.

Collapse, 1989–1993

GDP fell in 1991, 1992 and 1993; by 1993 the budget deficit had reached 33 percent of GDP (Rodríguez García). Food was the hardest hit. Average daily intake fell from 2,899 to 1,863 calories, the share of physically active adults — as people walked and cycled for lack of fuel and transport — rose from 30 to 67 percent, and the average adult lost 4–5 kilograms; obesity fell from 14 to 7 percent of the population (Franco et al.).

An epidemic of hunger

Malnutrition caused an epidemic. From January 1992 to January 1994, Cuba’s health ministry recorded 50,862 cases of a neuropathy affecting the eyes and the nerves of the limbs, typically with weight loss and fatigue. The U.S. Centers for Disease Control concluded that the epidemic was “associated with nutritional deficiencies,” linked to the economic hardship after 1989 that reduced the availability of meat, dairy and fats. Cases fell after the health ministry distributed vitamin supplements in the spring of 1993 (CDC).

Reform under pressure, 1993–1994

The government responded with measures that would have been unthinkable a few years earlier. In a speech in July 1993, Fidel Castro announced the legalization of the possession and use of foreign currency, including the U.S. dollar. State farms were converted into cooperatives (Basic Units of Cooperative Production), cutting the state’s share of arable land from 75 to 33 percent; self-employment was expanded; and in 1994 a convertible peso was introduced. Growth returned modestly from 1994 (Rodríguez García). Rodríguez García notes that legalizing the dollar created a dual economy with regressive effects on incomes.

The IMF economist Ernesto Hernández-Catá examined why the economy recovered in 1994–96. The most persuasive explanation, he concluded, was a surge in productivity resulting from the stabilization and liberalization of 1993–94 — and therefore “a strong and durable expansion will probably not be achieved on the basis of present policies, but … the benefits of a full liberalization of the economy are likely to be considerable” (Hernández-Catá, IMF).

Why it matters

The Special Period showed what thirty years of central planning had built: an economy that could not feed its people without a foreign patron. When the subsidy ended, Cubans lost a third of their food energy and tens of thousands suffered nerve damage from malnutrition. What revived the economy was not more planning but limited permission to use dollars, work for oneself and farm cooperatively. The rafters who took to the sea in 1994 (see Cuba’s exodus) were fleeing this crisis.

Further reading on this site

• Cuba’s exodus: six decades of refugee waves — including the rafter crisis of 1994.
• Leaving Cuba — how the state controlled who could go.
• Healthcare development in Cuba — the regime’s showcase, in context.
• All articles on Cuba and on planned economies.