The Cuban regime claims that it is working on the creation of a new mechanism for the management, control, and allocation of foreign currency, as part of its Government Program to correct economic distortions and revitalize the deteriorating national economy.
In the meeting of the Council of Ministers for the month of March, the First Deputy Minister of Economy and Planning, Mildrey Granadillo de la Torre, reported that the priorities have focused on the operational design of the currency market, the evaluation of closed self-financing schemes in foreign currency, and the definition of the schedule to implement the new monetary management system.
He pointed out that due to the complexity of the process, adjustments are being made to the planned schedule, and the resolution that will formally establish the new mechanism, which will be key to transforming the management of official exchange rates, is under review.
The delay in decision-making is exacerbating the crisis on the island. The dual currency system and inflation continue to impact the domestic economy of Cubans, with salaries insufficient to meet the basic needs of a family.
The government indicated that it is working on a detailed study of the risks and consequences associated with the structural changes that will be presented, with the aim of minimizing negative impacts.
To this end, they have developed working sessions led by the Ministry of Economy and Planning, in coordination with members of the Government Economic Group and specialists from the National Association of Economists and Accountants of Cuba. However, they did not specify what results they have reached.
Review of strategic sectors
At the same time, the regime indicated that it continues to review the closed foreign currency self-financing schemes approved for key sectors such as health, biotechnology, tobacco, tourism, and energy.
These schemes allow state entities to operate with income in foreign currency under certain conditions, without the need to channel all funds through the Central Bank.
In March, the government began testing a new salary payment scheme for foreign and mixed enterprises that pay half of what they used to for salaries. Those foreign currencies are converted to national currency at a rate five times higher than that applicable to legal entities.
The Council of Ministers did not miss the chance to blame the United States for this delay in decision-making, claiming that the complexity of the current situation in Cuba is due to the "unprecedented intensification of the economic, commercial, and financial blockade."
Frequently Asked Questions about the new foreign exchange market and partial dollarization in Cuba
What is the new currency market in Cuba seeking?
The new currency market in Cuba aims to correct economic distortions and revitalize the national economy. According to the Cuban government, this mechanism seeks to enhance the management and allocation of foreign currency through a new monetary administration system, which will allow for greater variability in the exchange rate by adjusting to supply and demand conditions.
What does the partial dollarization of the Cuban economy consist of?
Partial dollarization means the use of the dollar in certain sectors of the Cuban economy. This includes wholesale and retail trade, payment of tariffs, and foreign trade services. Additionally, the acceptance of cash dollars is allowed in strategic sectors such as tourism and international clinics, in order to attract more foreign currency amid the economic crisis.
How does the new currency exchange regime affect the informal foreign exchange market in Cuba?
The new exchange rate regime seeks to regulate and reduce the influence of the informal currency market. However, this market remains a crucial avenue for Cubans to access foreign currency, as the government has failed to establish an official exchange rate that reflects the actual economic conditions. The existence of an informal currency market complicates the country's economic situation.
Which sectors will accept cash payments in dollars in Cuba?
The 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, as part of the effort to attract more foreign currency amid the economic crisis.
Filed under:
