Cuba eliminates the double currency after more than 25 years

Havana – From this Friday the Cubans said goodbye to the convertible peso, ending the double currency circulation on the island for more than 25 years, so that from now on the Caribbean nation will only issue Cuban pesos.

The so-called CUC or popularly “chavito”, began issuing in 1994 at parity with the dollar to have a strong currency and face the crisis arising from the fall of the Soviet Union. However, it caused confusion in national accounts by making them less transparent as it also involved several exchange rates.

“Goodbye to the CUC. The famous ‘zero day’ of monetary and exchange rate unification is already marked in the national almanac,” the official Cubadebate portal published on Friday, confirming the announcement made by the authorities from December.

To date there were different CUC rates that could range from 12 to 24 per dollar. That is, the CUC had different prices if they were importing companies, personnel contractors for joint ventures or individuals.

In recent years, there have been repeated rumors about the elimination of the CUC, a currency that Cubans resorted to to meet basic consumption needs but which, being on par with the dollar, raised the costs of their consumption. life depreciating their salaries that were paid in Cuban pesos or CUP, which will remain now. It will be exchanged for one dollar for 24 CUP for all sectors.

“These reforms have long been identified as essential,” Cuban economist and professor at the Universidad Javeriana de Cali, Maurici De Miranda, wrote on his blog.

But what has been implemented so far “affects the sphere of circulation but does not ensure an increase in the production of goods and services, and its insufficiency is the main problem facing the Cuban economy,” said De Miranda, for who makes it necessary to allow greater private initiative such as the creation of cooperatives, permits for small and medium-sized enterprises and in general the stimulus to efficiency.

The government also reported that they will continue to operate in the country shops in foreign currencies where it is paid mostly in dollars but through cards, a way to capture strong currencies by the authorities.

Authorities also unveiled in recent weeks hundreds of resolutions and decrees to reorganize the entire monetary system, from wages, social security and taxes or tariffs.

Among the measures it was decided to raise the minimum wage to at least five times, which will be 2,100 Cuban pesos ($ 87). Pensions and retirements were also adjusted, but commodity price lists with increases in commodities such as rice, sugar or eggs were released.

It also increased energy, which caused so many complaints in the population that the authorities had to reconsider the tariffs last week, although they left a significant increase. Only not only that it did not rise were some commodities such as medicines for chronic diseases or children’s milk that the state insures everyone up to the age of seven.

The reorganization process comes at a time of severe crisis for Cuba, Hit by its own inefficiencies, the paralysis caused by the pandemic in key sectors such as tourism and increased sanctions by President Donald Trump’s government, some of which could be relatively reversed by his successor Joe Biden.

The beginning of the elimination of double currency circulation also coincided with one of the most important anniversaries of the island, the triumph of the revolution that reached its 62nd anniversary this Friday.