Cuba prepares to unify its two currencies
Audio 02:34
Cuban Pesos (CUP) and Cuban Convertible Pesos (CUC) (photo illustration).
REUTERS
By: Domitille Piron
6 min
Since last week, the Cuban government has been teaching and explaining the changes to come with the elimination of one of its two currencies.
Monetary unification is a real sea snake. Expected in Cuba for more than a decade, this reform has been carried out gradually for several months, so complex is it to implement ...
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When and how much?
No one has an answer but what is certain is that the CUC (Cuban convertible peso) will disappear in favor of the Cuban peso.
What is also certain is that Cubans have been waiting for this unification for more than 10 years because these two currencies have created a two-speed system.
State wages are paid in Cuban pesos while imported goods and products are sold in CUC which is therefore more valuable, according to Miguel Perez:
“
Most things you can buy in CUC, because in national currency there are a lot of things that don't sell.
While it is our Cuban national currency.
The Cuban peso has lost a lot of its value and you cannot buy everything with this currency.
For example, a towel you buy it in CUC, toothpaste you buy it in CUC, that's why in my opinion the Cuban peso is really not worth much.
"
While there are two currencies in circulation, there are, however, four exchange rates, including a preferential rate enjoyed by state-owned enterprises that allows them to import on a subsidized basis.
And this is undoubtedly one of the greatest challenges of monetary unification.
But for the population also the exchange rate between the Cuban peso and the CUC is a complex system ... In his fifties, hidden behind his sunglasses, Juan manages the parking lot of a store, motorists pay him as much in CUC as he does. Cuban peso and he often has the impression that the exchange is not favorable to him: "
The CUC, the State changes it to you at 25 pesos, but when you sell it he buys it for you at 24 and in the street he worth 23. You see how much we lose in the end!
"
But according to him the problem is not so much having two currencies, but rather money in a country where the average salary is equivalent to 44 dollars.
The government has also announced that monetary unification will come with a wage reform but Juan does not see a very significant change: "
It will not change anything to have a single currency if prices remain very high and wages very. low.
If they increase wages, they will also have to lower prices, so that the worker has access to what he needs.
"
But it is quite the opposite that the State foresees.
In one of the last and many explanations lasting several hours on television, the member of the political bureau of the CCP, Marino Murillo Jorge, with great pedagogy and caution, explained that if the four exchange rates are unified, the Cuban currency will be automatically devalued: “
It will be impossible not to devalue the Cuban peso.
And there is no way to prevent devaluation from causing prices to rise, it is impossible.
So there will be inflation!
"
The reform of monetary duality is therefore being carried out slowly to avoid an inflationary crisis, in a country already in great economic difficulty and which depends 80% on its imports.
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