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Posted May 25, 2008 by publisher in Business In Cuba

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AFP

Cuba is to abolish its dual monetary system as the country pursues timid economic reform under new leader Raul Castro, a senior official said in an interview published Sunday.

The communist Caribbean island state operates with the convertible peso,worth just under a US dollar, and the national peso, worth far less.

Cubans are paid in national pesos but require convertible pesos to buy certain goods.

‘Cuba will reform its monetary system as quickly as possible,’  the head of the Cuban parliament’s economic commission, Osvaldo Martinez, told the Spanish daily El Pais.

‘The government’s policy is to eliminate the dual currency, which to some extent hurts the country’s self-esteem, but we need a minimum quantity of monetary reserves for a normal exchange rate, prices and wages reform and greater economic efficiency,’ he said.

Since succeeding his ailing brother Fidel, in February, Raul Castro has eased a number of the tight restrictions on Cuban life, including allowing citizens to own mobile phones, rent cars, stay in tourist hotels and buy modern electrical goods.

Most Cubans, however, can still not afford to pay for such luxuries.

READ THE ORIGINAL STORY HERE

  1. Follow up post #1 added on May 28, 2008 by abh with 244 total posts

    To me this is a bigger deal than all of the other reforms put together.  I’m not an expert economist but this has got to be necessary for Cuba to begin sustainable development…


  2. Follow up post #2 added on May 28, 2008 by Mako with 172 total posts

    Not going to happen any time soon. Anything other than a slow metamorphosis of the CUC will leave an economy in total collapse with hyper inflation.
    The 2 currrencies will need to be merged in a methodical planned way or there will be a run on the banks


  3. Follow up post #3 added on May 29, 2008 by abh

    Mako-
    Sounds about right.  To be honest I’m surprised anybody is saying anything on the record about it.
    I think one theme that is developing that might especially interest the Publisher is: Is Raul and the Cuban government raising expectations too much?
    The issue of uniting the currencies seems to be pushing the envelope.
    It still seems like a necessary action at face value.


  4. Follow up post #4 added on May 29, 2008 by publisher with 3905 total posts

    If the Cuban people haven’t risen up against Fidel in the Special Period, I doubt they will rise up against Raul.

    Maybe after Fidel dies.



    Cuba consulting services

  5. Follow up post #5 added on May 29, 2008 by manfredz with 464 total posts

    My 2 centavos worth - I don’t expect the Cuban people to rise up at all, but to keep pushing and electing reformers so that teh system transitions into something else.
    There are many things the population enjoy that they feel they’ll lose if the totally overthrow the system.
    As I said, just my 2 centavos worth.


  6. Follow up post #6 added on May 29, 2008 by publisher with 3905 total posts

    “keep pushing and electing reformers” ???

    Manfredz,

    Did you misspeak here? I don’t think the Cuban people have elected ANYONE since the 1950s.

    They may have selected people who were on the ballot of one but elected? No.



    Cuba consulting services

  7. Follow up post #7 added on May 29, 2008 by manfredz with 464 total posts

    From our perspective that may be true, but from the perspective of the Cuban people that I talk to, tehy feel that although the system has a long way to go, they do feel that it is an elective process.

    Keep in mind, one can build a pretty good arguement that you do not elect your president or we our prime minister.  Its all relative.

    Cuba, especially with Fidel fading from the scene, will be going through struggles and debates in various power groups in which direction and how fast to go.  Think the days of “no need to change anything because we think its perfect”  are gone forever. And in my view (and i’ve been wrong many a time in world politics) the days of someone with an iron foot solely calling the shots are gone.

    But thats only my perception; anybody who disagrees with it is equally right.


  8. Follow up post #8 added on May 29, 2008 by abh with 244 total posts

    As long as (1) the embargo is around, (2)the taliban-types are running things in Cuba, and (3) the U.S. has an explicitly hostile posture towards Cuba, I don’t expect much change. 

    Hopefully if Obama is elected we can expect that (3) will not be as bad and (1) can begin to be dismantled.  There is a lot of work to be done just to get us back to the pre 2004 situation, keep that in mind.  (2) will change as a reaction to changes in U.S. policy.  I have always held this to be true and I now I believe it more than ever.


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