22 de abril de 2021

Monetary overhaul, Cuba’s big challenge amidst hard times

Within a daring political move Cuba is readying to make a monetary overhaul which will basically include currency unification, new exchange rate, salary and pension hike, new set of prices and change in the subsidy system without neglecting the vulnerable.
‘Let’s welcome the monetary overhaul because the country needs it. We must have a practical and optimistic vision; it will be to the benefit of all’, Deputy Prime Minister and Economy Minister, Alejandro Gil, told the nation last night in a television radio hookup.

Accompanying the Minister in the public appearance, the head of the Permanent Commission for Implementation and Development of the Communisty Party Economic Guidelines, Marino Murillo, said that ‘the monetary overhaul is not as simple as removing one currency and leaving another, it implies a set of interactions’.

Currently Cuba has two currencies, the regular peso, known as CUP, and the convertible peso (CUC) introduced in the late 90’s as an equivalent to the US dollar when the US administration then imposed punitive measures against the island for using its currency.

Such two-tier monetary system has meant a heavy burden for Cuban economy, both officials agreed.

In his long explanation, Murrillo pointed out that the new prices and the minimum wage have been estimated according to a basic consumption basquet, which will include subsidized products and others without such benefit, while the new exchange rate of the CUP against the USD will take into account the country’s financial reality to avoid its overappreciation.

With the ejecution of this plan will benefit exporters and national companies working to replace imports, as well as the people.

The basic objetive is to solve the monetary and exchange duality, eliminate subsidies and gratuities, and transform people’s revenues.

Murillo noted that the monetary ordering is a cross-cutting process in the country’s economy aimed at solving macroeconomic unbalances, reducing budgetary deficits, favoring incentives to production, and improving efficiency and competitiveness internationally.

The official explained that as part of the monetary and exchange duality in Cuba, there is an overvaluation of the peso against the US dollar that hinders productive capacities.

He repeated that the monetary unification will not be a long process and is supported by the Government so that legal and natural persons do not report losses.

Due to the negative impact of the COVID-19 pandemic, Cuba updated an economic plan that contains actions to reduce imports, favor exports, boost the application of science and technology, increase food production and foster productive linkages.

According to Deputy Prime Minister and Economy Minister Alejandro Gil, this strategy also considers centralized planning, market regulation, the complementariness of the economic stockholders and the dynamizing role of the domestic demand.

Gil explained that the monetary and exchange duality hinders the economy and affects prices, salaries, efficiency, incentives, the management of macroeconomic balances, comparability with the rest of the world and institutionality.

Amid an increasingly tightened blockade, it is not possible to manage this situation if the monetary ordering is not achieved to be able to make progress in other transformations, the two officials agreed.

(Taken from Prensa Latina)

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