Cash-strapped Cubans fret over dual currency

A Cuban shows Cuban Pesos CUP (Left hand) and Convertible Pesos CUC (Right hand), on October 22, 2013 in Havana. YAMIL LAGE/AFP/Getty Images

HAVANA - "The decision to unify Cuba's dual currency and exchange rate cannot be postponed," says Joaquin Infante, advisor to the head of the Cuban Association of Economists.

The interview with Infante touches on one of the hottest issues of concern to Cubans who have to cope with wages that have not kept up with the cost of living particularly in the last decade. Most affected are public employees who still make up the majority of the labor force and retirees living on government pensions that are insufficient to cover even basic necessities such as food, electricity, and cooking gas, much less a new pair of shoes.

So Cubans constantly ask when the currency unification will take place and what it will mean for their budgets.

Unfortunately, like previous information in the local media, the interview published on the back page of the official daily Granma Monday only partially answers those questions.

Infante says "the currency and exchange rate unification in the state sector should not be put off," while, on the other hand, he says the unification on the street level--that is among the population--should be "more gradual" but offers no solid time framework.

He did add that the elimination of the dual currency "would not in itself increase people's purchasing power." Instead, he said, the value of the surviving Cuban peso currency "will be linked to increased productivity, labor efficiency, and the profitability and competiveness of Cuba's production."

"I've heard that before," says Hugo, a food services worker who recently quit his job in frustration. "I never get ahead and depend on money sent by my son who lives in Spain and tips, its degrading," he concluded. He refused to say what he would do to earn a living now but hinted that he would sell his car and possibly his home, an indication that he might be planning to leave the country.

Patricia, an emergency room doctor, worries just when the peso in which she is paid will become the single currency.

"Will I be able to afford to buy new clothes for my 14-year-old daughter and to give her money to go out to have fun with her friends or will things still be as expensive as they are now?" she asks.

She is left with this concern even though medical professionals are much better off than the other state-employees, having recently received a 100 percent salary increase due to the profitability of medical exports.

"I'm putting money away in the bank but I'm not sure what it will be worth in the future," she fretted.

Infante doesn't address these concerns sufficiently, says a former diplomat now working in hotel management, who asked not to be identified.

Infante blames the existence of the dual currency on Cuba's "extreme dependency on foreign trade and limited hard currency reserves, as well as the U.S. economic and trade embargo and price fluctuations on both imports and exports on the international market." He further says the dual currency exchange rate "doesn't permit a realistic vision of production costs, distorts the information for doing feasibility studies and evaluating investments and can undervalue imports and exports."

Strategically, according to Infante, it's most important to implement the unification on a macro-economic level in the state sector where the duality has been maintained due to "excessive centralization of operating decisions, the formal character of finances and economic management by administrative decisions rather than by financial and economic indicators."

And, he notes, another problem is that not all Cuban Convertible Pesos (CUC) issued are backed by hard currency, resulting in the creation of something called Letter of Liquidity to identify CUCs that have actual convertible currency behind them.

A young state-agency tour guide hoping to get married and start a family soon shrugged after reading the article. "It's just more gobbledygook," he said before asking that he not be named because he didn't want to get into trouble at work.

"I depend on the tips as I make as a guide to live," he said. "I'm sick of hearing about all the reasons we can't be paid more, all the problems."

Most of all there is a unanimous complaint that the local media is not adequately covering the issues of greatest concern to people. Many say that Cuban TV news segments such as the weekly "Cuba Dice" (or "Cuba Speaks") provide only superficial treatment and provide little or no follow-up.

  • Portia Siegelbaum

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