Cuba is abolishing dual currency after more than 25 years

Havana – Since this Friday, Cubans have said goodbye to the convertible peso, ending the dual currency circulation on the island for more than 25 years, so that the Caribbean country will now only spend Cuban pesos.

Also known as CUC or colloquially “chavito”, it began to be issued in 1994 on par with the dollar in order to have a strong currency and face the crisis created by the fall of the United States. the Soviet Union. However, it caused confusion in the national accounts, making them not very transparent because different exchange rates were also involved.

Farewell to the CUC. The famous ‘day zero’ of monetary and stock market unification has already been highlighted in the national almanac, ”the official Cubadebate portal published this Friday, confirming the announcement that the authorities have released since December.

To date, there were different CUC rates that could vary between 12 and 24 per dollar. In other words, the CUC had different awards if they were importers, joint venture personnel contractors, or private individuals.

In recent years, there have been repeated rumors of the abolition of the CUC, a currency that Cubans used to provide basic necessities but which, on par with the dollar, increased their cost of living by raising their salaries in Cuban pesos. or CUP, the one that will stay now. It will be changed to one dollar for 24 CUP for all sectors.

“These reforms have long been considered essential,” wrote Mauricio De Miranda on his blog, the Cuban economist and professor at the Javeriana University of Cali.

But what has been implemented so far “affects the sphere of circulation, but does not increase the production of goods and services, and its inadequacy is the main problem of the Cuban economy,” said De Miranda, for whom it is needed. enable greater private initiative such as the creation of cooperatives, licensing for small and medium-sized businesses and the promotion of efficiency in general.

The government also reported that they will continue to operate foreign currency stores in the country where payment is mainly made in dollars, but with cards, a way of getting hard currency by the authorities.

The authorities have also released hundreds of resolutions and decrees in recent weeks to reorganize the entire monetary system, from salaries, social security and taxes or rates.

Under the measures, it has been decided to raise the minimum wage at least five times, which equates to 2,100 Cuban pesos ($ 87). Pensions and withdrawals were also adjusted, but the price list of basic products with increases in commodities such as rice, sugar or eggs was released.

The energy also increased, causing so many complaints from the population that authorities had to review rates last week, although they showed a significant increase. The one thing that wasn’t the only thing that didn’t go up were some basic products like chronic disease medications or infant milk that the state insures for up to seven years each.

The reorganization process occurs at a time of serious crisis Cuba, affected by its own inefficiencies, the paralysis caused by the pandemic in key sectors such as tourism and the increase in sanctions by President Donald Trump’s administration, some of which could be relatively undone by his successor Joe Biden.

The beginning of the elimination of the dual money circulation also coincided with one of the most important events on the island, the triumph of the revolution that celebrated its 62nd anniversary this Friday.