The Cuban Regime Is Dollarizing the Economy To Capture ‘The Foreign Currency That Is Currently Being Moved Illegally’

Prime Minister Marrero asked that the Government have control over the foreign currency and be the one to put it “in function of the well-being of the population”

The 3rd and 70th supermarket has accelerated the rise in the exchange rate. / 14ymedio

14ymedio bigger14ymedio, Madrid, 8 January 2024 — Cuba’s Prime Minister put on paper on Tuesday the government plan that  in recent days has everyone talking on the street, starting with the discussed opening of the 3rd and 70th supermarket, on the ground floor of the Gran Muthu Habana luxury hotel. The supermarket only accepts payment in dollars. Manuel Marrero clarified in a message broadcast through official channels that the “partial” dollarization that he announced before Parliament last December is a process “to be able to acquire the foreign currency that is moving illegally in society.”

The words were literally spoken by the head of the Government in the recent ordinary session of the National Assembly, which now appear verbatim in order to clarify the “doubts and concerns raised in recent days on social networks.” Marrero asked that the Government have control over the currencies in order to apply them “in function of the well-being of the population,” despite the fact that the debate indicates a generalized malaise, especially for the population that does not have the currency that gives access not only to a good standard of living, but simply to basic foods absent in the bodegas (ration stores) and in stores that accept in freely convertible currency (MLC), whose disappearance is increasingly openly speculated.

The Government’s note insists that “the way forward is the de-dollarization of the economy, but we must follow this previous path.” The phrase is exactly reminiscent of the words spoken in October 2020 by the then Deputy Prime Minister and Minister of the Economy, Alejandro Gil Fernández – who is now detained for an alleged corruption case that has never been clarified – when referring to the MLC stores, which had begun selling household appliances a year ago, months before offering food products.

The official described the MLC stores as “undesirable but necessary and temporary” and argued that they “subsidized” “social justice.”

The official described the MLC stores as “undesirable but necessary and temporary” and argued that they “subsidized” “social justice.” The idea was then – as now – “to do something because foreign currency is running out” and to replenish it to “guarantee a minimum supply of national currency.” Also at that time, the intention was declared that the process would end with the peso as the only currency in circulation. The results are on display.

The note published on social media by the Cuban government highlights that there will be “territorial dollarization schemes, especially for export sectors, so that they can replenish themselves and continue producing, and that this will also have an impact on production in national currency for the population.” The similarity with Gil Fernández’s statements is obvious.

The control measures affect wholesale and retail sales, which must be approved after taking into account their justification. The payment of tariffs in foreign currency is also mentioned, “especially for foreign trade operations of non-state management forms,” a measure that follows the same path, since it was previously allowed to be carried out in MLC.

“The acceptance of cash in foreign currency in certain establishments is also being added, so that difficulties with electronic payment processes do not limit the obtaining of income,” the text details, which means that the State sacrifices its failed banking policy – ​​especially regarding payment methods in stores – in order to collect foreign currency.

“The actions have been implemented in the tourism sector, in Casas del Habano, in international pharmacies, opticians, international clinics, last-minute waiting rooms at airports and other environments that have been authorized as exceptions,” the message summarizes.

The Government note also states that “schemes have been approved to pay certain producers directly in foreign currency, so that they can acquire their inputs.”

The Government note also states that “schemes have been approved to pay certain producers directly in foreign currency, so that they can purchase their inputs, both for some who produce exportable goods and for agricultural producers.” It should be remembered that this measure had already been promised years ago for those producers who delivered a surplus with respect to what was contracted, however, the majority of potential beneficiaries constantly complained about non-payments, which prevented them from being able to purchase inputs that could only be paid for in foreign currency.

The first results of these policies have come in a big way. The dollar closed the year at exactly 300 pesos on the informal currency market, according to the representative rate published daily by El Toque. Only eight days later, the currency is already trading at 330 Cuban pesos, a much more dizzying jump than the previous fall. The currency, after a spring and summer of growth, during which it was feared that it would reach a rate of 500 pesos to the dollar, has stagnated since September at around 325, with small fluctuations.

The paralysis was mainly due to the new measures for the private sector, including the prohibition of wholesale sales of imported products or maximum prices for a group of foods considered essential. Caution was transferred to the parallel dollar market until, in the last 15 days of December, it fell to 300, from which it has recovered in just one week, especially as the increase in dollar stores has become known. The Infanta and Santa Marta store in Havana is another of the new Caribe stores that sells in dollars and, although it still accepts MLC, the employees themselves told this newspaper that it was foreseeable that this practice would cease.

Reactions to the government’s publication have made clear the discontent, once again, with this kind of recurring apartheid faced by citizens.

Reactions to the government’s publication have made clear the discontent, once again, with this kind of recurring apartheid faced by citizens. “No more deception. Remember the ‘Ordering Task’, a total failure for the people. You are bourgeois, you defend the bourgeoisie created by you. No more lies or use the name of Fidel or socialism,” demanded one commentator.

Another commentator showed the Prime Minister the door. “If someone chooses you to provide a service, whatever it may be, and after a certain period of time it has been impossible or difficult for you to keep your word, the most fair, moral and ethical thing to do is to hand over the benefits previously granted and give the space over for someone else to perform or provide the agreed service,” they said.

None of that is even remotely on the table, although his predecessor in the discourse, Alejandro Gil Fernández, already knows what it is like to have to move over.
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