Cuban Government Will Regulate Foreign Exchange in Bank Accounts of State Companies and Private Sector

The legal rule will go into effect on June 3. (Facebook)

14ymedio bigger14ymedio, Havana, 20 May 2021 — The Cuban Government is limiting the use of accounts in freely convertible currency (MLC) of state companies and self-employed persons authorized to sell in dollars, following the approval this Wednesday of Resolution 157/2021 of the Central Bank of Cuba (BCC).

The legal rule, which will come into effect on June 3, stipulates that all operations in both the state and private sectors must be carried out in Cuban pesos and foreign exchange may not be extracted from commercial exchanges.

According to Elías Amor, a Cuban economist living in Spain, this is “yet another blow to the control of foreign exchange… The regime has set its sights on the private sector, practically decimated by the crisis of the pandemic, and now it wants to ’intervene’ in the scarce resources it possesses, especially in foreign exchange,” Amor wrote on his blog Cubaeconomía.

Last year, the Government had authorized the opening of current accounts in foreign currency for private entrepreneurs so that, with the mediation of a state company, they could sell their products abroad.

The BCC also defined the sources of income of the bank accounts in foreign currency of the self-employed: the intermediary state companies, foreign investors established in the Mariel Special Development Zone and accounts in pesos “backed by CL” with which they have a commercial relationship, “in accordance with the current procedures” of the BCC “on the allocation and use of liquidity in foreign currency.”

Meanwhile, state entities authorized to carry out sales in dollars must register their inventories in Cuban pesos and pay, in the latter currency, salaries, electricity, water, transportation expenses, among other services.

“The dollar is drained directly into the state coffers once people buy the products or services they need, and the stores prepare all their accounts in Cuban pesos, despite the fact that the sale prices were in dollars,” reflects Amor.

The economist called the new change on the island, a “muddle of accounting and falsification of economic information… The country’s currency situation is critical. Under these conditions, maintaining the exchange of the Cuban peso with the dollar at 24-to-1 is a serious mistake. Another devaluation is becoming urgent,” he said.

Private businesses employ around 30% of the country’s active force and contribute 13% to the State coffers through taxes, according to official data collected in a report from the Cuban Observatory for Human Rights (OCDH) last March. .

The Madrid-based NGO stated that “the failure of the Cuban economic system is becoming increasingly evident.” If self-employment is important today, a generator of half a million jobs, “it would be much more important to create the conditions for its healthy development that would promote density in the business fabric and generate a multiplier effect from which it would benefit, above all, the village”.

This Thursday and without prior notice, the exchange houses (Cadeca) at Cuban airports stopped selling foreign currency due to lack of cash. The news was announced by the state entity in a message spread through its social networks a few hours before the measure went into effect.

Cadeca maintains that the low influx of tourists due to the pandemic has caused a “significant deficit” in foreign exchange and that to date it has been able to operate within the established limits, but the lack of liquidity has reached an unsustainable extreme.


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