HAVANA TIMES — The Cuban government implemented this Friday a reduction of 20 percent in the price of 70 products, mainly food, in response to the demands of the general population over the insufficient purchasing power of their salaries and pensions.
The news was officially announced Thursday night on the National Television News and published with the list of products in the official Granma and Juventud Rebelde newspapers.
Unofficial versions of the new prices had begun to circulate in Cuba since the beginning of this week.
The announcement from the Ministry of Finance and Prices speaks of this reduction as a measure to “gradually increase the purchasing power of the Cuban peso (CUP)”. The overwhelming majority of the price reduction affects products sold in convertible pesos (CUC) in state stores chains. (1 CUC = 24 CUP = 1.15 USD)
Insufficient wages and pensions
In justifying the change, the Ministry quoted the central report submitted by President Raul Castro at the recently concluded Seventh Congress of the Communist Party, which recognized that “wages and pensions are still insufficient to meet the basic needs of the Cuban family.”
“The ultimate solution to this complex reality will be achieved with increased productivity and efficiency of the national economy. However, the political will of the leadership of the Party and the Government to make every effort to improve the situation of the population in the midst of the limitations combined with the decline in food prices on the world market, led to adopting a set of measures to gradually increase the purchasing power of the Cuban peso in the short term, to take effect on Friday April 22, “said the government statement.
The measures announced are:
-Reduce prices in the vicinity of 20% in the hard currency stores (TRD) and the parallel market of the Ministry of Internal Trade (MINCIN) for a group of selected products, especially food.
-Reduce the price of imported rice sold freely on the controlled market from 5.00 CUP a pound to 4.00 CUP. -The price of domestic rice sold freely on the controlled market drops from 3.50 CUP a pound to 3.00 CUP.
-The price of peas sold freely on the controlled market drops from 3.50 CUP a pound to 3.00 CUP.
-Institute the selling of chicken in large format (boxes), with a decrease of 6% from the current retail price.
The government statement said that other measures with the same purpose are under study.
Monetary unification is one of the major outstanding tasks before the government of Raul Castro. The process to eliminate the dual currency was launched in October 2013, but has been continuously delayed. Monetary duality exists in the country since legalizing possession of the US dollar in August 1994, then, in 2004, the government eliminated domestic transactions in dollars and imposed the use of the CUC.
The elimination of the dual currency was a stated objective since April 2011, when the Sixth Party Congress implemented the new guidelines for updating the economic model of the country. Cubans co-exist with two currencies: the CUP, with which the population takes their wages and pay rationed goods and public services, and the CUC, which is equivalent to 24 CUP.
Last March, the government promised to eliminate a tax of 10 percent that is imposed on citizens for the conversion of US dollars into CUC, as soon as Cuban banks could use the US dollar in its international transactions, as stipulated by the new measures announced by the White House to relax the embargo. However, so far the decision to eliminate the tax on the dollar has not been implemented.
Below the list of products with new prices at the State monopoly retail stores:
Ministerio de Finanzas y Precios