As the process of economic reform in Cuba, the elimination of the dual currency proceeds slowly but surely. Although the convertible peso (CUC) will stop circulating sooner than later, already the unification process is felt in the streets: from the new possibility to buy using Cuban pesos (CUP) in some of the so-called dollar stores, to the publication of accounting rules to form prices after Day Zero.
Some shopping centers in the province of Camagüey collect more “national currency” than convertible pesos through their sales. Part of the action plan for an economy without duality was studied in lectures by economists and accountants (and even announced by street vendors).
A year after the announcement of the “schedule for the implementation of measures that will lead to monetary and exchange rate unification,” part of the schedule is already a fact, but the rest remains a state secret.
In January 2014, the Central Bank of Cuba (BCC) said only generalities like “the country moves steadily” in unification, without details, while ten months later, the president of that institution, Ernesto Medina, reported implementation of a concerted effort with the Central Government to remove duality.
As economists have explained, the problem is not the dual currency, but the double rate of change in the Cuban economy: firms and state entities buy 1 CUC with 1 CUP while a Cuban citizen has to pay 25 CUP to acquire that amount. The disproportion is 2500%.
There is also a 1 CUC for 10 CUP [3], used in the sale of agricultural products to the tourism and hospitality facilities, in force since 2011 and preceded by a “seven for one” used previously.
The Ministry of Finance and Prices exclusively for OnCuba stated that ten for one was not a rate of change, but compensation or subsidy applied to the current contribution to the state.
It is no coincidence that the official term used by the government is monetary and exchange rate unification, as the two contribution rates will be merged. “There is no exchange rate for the entire economy, that is, an economic rate of return is accurate and scientifically based” Cuban economist Francisco Pérez Rosado told Cuban weekly Trabajadores.
Exchange rate distortions can be traced to the emergence of the Cuban peso himself, whose initial conversion rate in 1914, as in the present, was one for a dollar.
A cancer in the form of money
In Cuba, “the most acute macroeconomic problem is the monetary duality, it distorts the cost structure and relative prices, harmfully affecting the allocation of resources in the economy,” wrote Vilma Hidalgo, economics professor and deputy rector of the University of Havana.
Pérez Rosado predicts that unification will “favor exporting firms whose revenues would increase, and also would remove the artificial stimulus to import that today presupposes the existence of an exchange rate of one CUC equivalent to one CUP”
Vilma Hidalgo notes that “duality penalizes the export sector, and failed to properly register the opportunity cost of currency in the corporate sector, reducing the opportunities for national chains. It also prevents proper evaluation of public finance and investment projects. ”
Marino Murillo, vice president for economic update, reported that unification will not change the purchasing power of Cuban employees. “There will not be, either, price increases for that reason, is not going to affect the person,” said the now Economy Minister.
Economic and state authorities agree that the end of the dual currency will not instantly change the lives of Cubans. Like all other reforms will open the doors for a major transformation in the future.
