14ymedio, Zunilda Mata, Havana, 17 February 2018 — “I do not accept CUC,” the driver of the shared taxi warns passengers at Havana’s Fraternity Park. It is the third time that day that Lídice, 40, has heard the same phrase. The first time was from a peanut seller and then from a barber. Both refused to take his chavitos — a slang term for Cuban convertible pesos — because of the uncertainty surrounding the CUC in the face of possible monetary unification.
A few words from Raúl Castro in the Parliament last December sufficed to unleash speculations. The president explained then that without unifying the currencies it would be “difficult to advance correctly,” and Cubans have interpreted his speech as the signal that the CUC was on the way out.
The convertible peso is taking the brunt of it amid rumors and fears. Sellers and merchants have begun to reject it in some operations so as not to be left with bills that could suffer a major devaluation when the Central Bank withdraws them from circulation in exchange for Cuban pesos, which would then become the only national currency.
In just a few months the dual currency system will be a quarter of a century old, and now, not too many weeks from the change of government, announced for 19 April, people’s fears are growing before the inevitable process of monetary unification. Those who have savings accounts in CUC suspect that their balances will be affected, although the authorities have said that those who have bank deposits will not be harmed.
This situation of uncertainty and lack of liquidity, in addition to the substantial worsening of the national economy with the substantial cut in shipments of Venezuelan oil, are causing a rise in the dollar on the currency black market.
Every morning, Armando (fictitious name) stands a few yards from the Currency Exchange Booth (Cadeca) on Obispo Street, in the historic center of the city. There, with discretion, he hands out cards to the most interested customers. His private money changing business is in high demand in the parallel market.
Armando is the person to turn to for people who receive their remittances from family members abroad in dollars and do not want to settle for the Central Bank’s exchange rate, which delivers only 0.87 CUC for every dollar, after charging a commission and a 10% tax on the American currency.
The money changer buys the dollars at a price ranging between 0.91 and 0.93 CUC and then resells them at a rate between 0.94 and 0.97, depending on the amount. His main clients are the ‘mules’, who need dollars to travel abroad where they buy merchandise to sell later in Cuba.
“Don’t wait, the chavitos are short-timers,” Armando tells those in line for the Cadeca. At least two people look interested and later stay to exchange over 1,000 dollars worth.
The economist Carmelo Mesa-Lago, resident in the United States, warns that “the monetary change or unification will not increase the purchasing power of the population, for that production and productivity would have to increase,” something that has not been achieved despite the timid opening to the private sector and the delivery of lands to private operators in a form of leasing known as usufruct.
In the last five years Raul Castro’s government has taken steps to reconcile the use of both currencies, such as authorizing the payment in Cuban pesos (CUP) in the state’s chain of stores called TRD — the initials in Spanish for Hard Currency Collection Store — but the unification has been postponed.
“This is without haste and with a lot of pausing,” jokes Marieta, riffing off a phrase used by Raul Castro in a key speech talking about the necessary pace of change. Marieta works in a state company that manufactures hygiene products. “In addition to my salary in CUP I receive an additional payment in convertible currency every three months,” she explains, but “the least important thing is the color of the bills, what interests me most is what can I buy with that money and the truth is that it’s very little.”
“If the 450 CUP that I earn suddenly becomes 450 dollars, then the stores will be empty,” reflects Marieta. At the moment the low salaries, which do not exceed 35 dollars per month, don’t stretch enough to buy the products that the State sells at high prices in its commercial network. The situation would change completely if the government suddenly decided that 1 CUP equals one dollar, which is the official exchange rate of the CUC, though not what is actually collected for one.
Luis, 42, a cheese maker in Alquizar, was called to a military mobilization two weeks ago as a reservist. “They had just called me when me I told my mother to buy all the dollars she could because that would protect us under the unification of the currency.”
When a senior official of the European Union commented a few days ago in Havana that the EU was willing to provide technical assistance for monetary reunification, Luis told his barracks mates that “the thing” was imminent.
But the days passed, the Artemisan finished his mobilization and has continued to sell cheese on the side of the road. “I have to accept the convertible pesos because that is what most of the customers that stop to buy have,” he acknowledges. However, his own advice applies: “In order not to accumulate too many, I invest in goods and buy dollars.”
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