The Cuban government approved a document that regulates the "partial dollarization of the economy", as announced by Prime Minister Manuel Marrero Cruz during the fourth ordinary session of the National Assembly.
This measure, which reflects the growing influence of the U.S. dollar in the country, seeks (for the umpteenth time) to reorganize key sectors of the economy while attempting to control the impact of the informal currency market.
The partial dollarization scheme will cover the following sectors: wholesale and retail trade in previously approved currencies; and payment of tariffs and services related to foreign trade for non-state management forms.
Additionally, cash payments in dollars will be accepted in strategic sectors such as tourism, Casas del Habano, pharmacies, optical shops, international clinics, and airports. Furthermore, there will be payments in foreign currencies to agricultural producers who substitute imports and to those who manufacture exportable goods.
According to the regime, this regulation will also allow greater flexibility in the use of foreign currencies for specific economic activities, such as tourism and foreign trade, key sectors for revenue generation amid the economic crisis.
Contradictions and Challenges
Despite this opening, Marrero reiterated that the government seeks to move towards the de-dollarization of the economy. However, he acknowledged that informal dollarization is out of control, driven by a parallel currency market that operates outside of official regulations.
"In the economy, there is a dollarization that has not been controlled, driven by the informal exchange market," he admitted.
Indeed, the prime minister blames the informal market and the private sector for the prices they set based on this exchange rate, which is why he issued a warning: no one can sell in foreign currency without an approval.
The communist regime faces an economic dilemma: the need to attract foreign currency against its policy of dedollarization. This new measure marks a shift in the economic strategy, which aims to mitigate the impact of the country’s structural crisis and maintain control over vital sectors, while the dollar continues to gain prominence in the daily lives of Cubans.
This measure reflects an unavoidable reality: the dollar is consolidating as a key currency in a system that struggles to maintain stability.
Frequently Asked Questions about the Partial Dollarization of the Cuban Economy
What does "partial dollarization" of the Cuban economy entail?
"Partial dollarization" means that the US dollar will play a more prominent role in certain economic sectors of the country. This includes wholesale and retail trade in foreign currency, payment of tariffs and services related to foreign trade, and the acceptance of cash dollars in strategic sectors like tourism and international clinics. This measure aims to reorganize key sectors and control the informal foreign exchange market amidst the economic crisis facing Cuba.
Why is the Cuban government once again accepting cash payments in dollars?
The Cuban government has decided to accept cash payments in dollars again to capture more foreign currency amid a severe economic crisis. This is part of a "Macroeconomic Stabilization Program" aimed at controlling dollarization and improving liquidity in the country. The measure applies in sectors such as tourism, where credit cards often do not work, affecting the government's ability to generate revenue.
How does this measure affect the informal foreign exchange market in Cuba?
The measure seeks to regulate and reduce the influence of the informal foreign exchange market, where the dollar has been traded at much higher rates than the official ones. However, the informal market remains a crucial avenue for Cubans to access foreign currency, as the government has not been able to establish an official exchange rate that reflects real economic conditions. This has led to fluctuations in the dollar's value in the informal market, further complicating the country's economic situation.
Which sectors will accept cash payments in dollars?
Sectors that will accept cash payments in dollars include tourism, Casas del Habano, pharmacies, optical shops, international clinics, and airports. Additionally, payments in foreign currency will be allowed for agricultural producers who substitute imports and for manufacturers of exportable goods. This is part of an effort to reorganize and improve the efficiency of key sectors in generating income.
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