The recent opening of a dollar market in Havana brings to mind the statements made by the ruler Miguel Díaz-Canel in 2020, when the regime was planning monetary unification and promised not to dollarize the economy.
"They took to social media to say that we were going to dollarize the economy, close the stores selling in CUC, and that everything would be sold in foreign currency, leaving the working people, 'whom they care so much about' and who earn in CUP, completely unprotected," said Díaz-Canel.
He added that all of this was part of a campaign driven by opposition groups and the independent press. "That is the narrative they are trying to propagate on social media," he stated in 2020.
In 2022, during the accountability presentation of his administration before the Parliament, the president acknowledged that there was a partial dollarization of the economy in Cuba.
Among the macroeconomic imbalances, it included the loss of foreign currency income, high fiscal deficits, an increase in income for individuals, and low productivity in generating supply of goods and services for the working population.
Then came the corruption scandal at the top of the regime, which resulted in the arrest of former Minister of Economy and Planning, Alejandro Gil. Very little information about this case has been disclosed to the public. It seems that the regime hopes that the passage of time will erase the memories of the Cuban people.
In five years, not only have the CUC stores disappeared, but now the stores that accept freely convertible currency (MLC) are also facing shortages and are expected to gradually close, as the government prioritizes exclusive establishments that only accept cash in dollars or debit cards loaded with foreign currency.
From MLC stores to dollar exclusivity
In a drastic turn, the informal currency market in Cuba has experienced a surge in prices in recent weeks, reflecting economic uncertainty and high demand for foreign currencies.
The opening of the new supermarket at 3rd and 70 in Havana has generated indignation. This new establishment is fully stocked with both national and foreign products, but it only accepts cash in dollars or cards linked to accounts in foreign currency, excluding the Cuban peso and the MLC that the government defended so strongly.
"It's a complete disrespect. First the MLC, they wouldn't accept USD, only euros, and now it's USD, they don't accept euros in that store. The one across the way, which is MLC, is completely empty, while the new one in USD is stocked to the ceiling. Damn, how long is this going to last? Where do they want to take us?" expressed a frustrated customer on social media.
The change in candy
One of the most controversial practices of this supermarket is that it gives change in candy. If the change is less than a dollar, customers must accept sweets as their refund, a measure that recalls other instances of arbitrary monetary exchanges in Cuba.
Since the 1960s, with the elimination of the original Cuban peso, to the recent transition from the CUC to the MLC, Cubans have lost savings and faced restrictions. Episodes such as the "Casa del Oro" in the 1990s, where citizens handed over their jewelry for small cash amounts, are examples of an abusive economic policy.
Currency exchange stores in a dollarized economy in Cuba
The supermarket on 3rd and 70th belongs to the Gran Muthu Habana Hotel, managed by the MGM Muthu Hotels chain and the Gaviota group, which is controlled by the military leadership GAESA.
This exclusive market model reflects an increasing dollarization that, in Díaz-Canel's words in 2020, was never supposed to happen: "They said we were going to close the stores in CUC and that there would only be stores in foreign currencies, in freely convertible currency (MLC), and that is not the case," he asserted at that time.
In practice, the reality has been different. While the majority of Cubans must survive with a devalued peso, the government prioritizes the collection of foreign currency through exclusive markets that limit access to essential goods.
This economic outlook is yet another blow to the trust of Cubans in their monetary system and government, leaving the population increasingly dissatisfied with the unfulfilled promises of the communists.
Frequently Asked Questions about Dollarization and the Dollar Market in Cuba
What does the opening of the supermarket that only accepts dollars in Havana imply?
The opening of the supermarket that only accepts dollars in Havana reflects a growing dollarization of the Cuban economy, restricting access to products for those who have foreign currency and excluding most Cubans who earn in Cuban pesos or MLC. This situation exacerbates social and economic inequalities on the island.
How does the partial dollarization of the Cuban economy affect citizens?
The partial dollarization of the Cuban economy is leading to increased demand for foreign currency and a depreciation of the Cuban peso, which is impacting the purchasing power of citizens. Those Cubans without access to dollars are struggling to afford basic goods, exacerbating poverty and social inequalities in the country.
What is the current situation of stores in Freely Convertible Currency (MLC) in Cuba?
The stores in MLC, designed to attract foreign currency, are currently understocked and have lost importance compared to new markets that only accept cash dollars or international cards. This indicates a shift in the Cuban regime's economic policies towards a more direct form of dollarization, which leaves many Cubans without access to essential goods.
What are the consequences of giving change in candies in dollar supermarkets?
The practice of giving change in candies at supermarkets that operate in dollars is seen as a symbol of the economic arbitrariness of the Cuban regime. This measure evokes past episodes of abusive currency changes and generates discontent among citizens, who perceive a lack of respect for their basic needs.
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