Cuba: “End of Dual Currency Won’t Hurt the Population”

According to the head of the economic reforms Marino Murillo

Marino Murillo

HAVANA TIMES — The Cuban government said today that the planned elimination of the dual currency on the island will not cause a price increase or affect the “purchasing power” of the population, reported dpa news.

The elimination of the dual currency prevailing on the island since the 90s “will have no effect” nor will there be “price increases for these causes,” said Marino Murillo, the official in charge of Cuba’s program of market reforms.

Speaking to the Cuban parliament meeting in Havana, the so-called “czar” of the island’s economic reforms said: “People’s purchasing power” (already one of the lowest on the continent) “will be respected.”

Cuba has two currencies since 1994. The Cuban peso (CUP), which state salaries and pensions are paid, and the convertible peso (CUC), comparable to the dollar and whose exchange rate is 25 times that of CUP. The hard currency is mostly used in the tourism sector and in stores where imported products are sold, including many basic food products.

Raul Castro’s government announced in October 2013, a “time table” to eliminate the dual currency, considered by experts as a key reform needed to boost the recovery of the Cuban economy. The change provides for the elimination of the CUC.

The announcement of the reform caused some concern among sectors of the population who have savings in CUC, often saved in cash at home.

Not the solution in itself

Murillo admitted that the monetary reform in itself will not solve the problems of the Cuban economy, mired in a chronic crisis for over two decades, after the demise of the Soviet Union and the socialist bloc.

The reform alone will not solve “the problems of the economy or solve the purchasing power of wages,” said Murillo, quoted by Prensa Latina. Average wages in the large state sector on the island are around 20 CUC a month.

Cuba recently lowered its economic growth forecasts for 2014 from 2.2 initially expected to 1.4 percent, due to a “higher than expected slowdown.”

President Raul Castro today chaired the second plenary session of the year of the Cuban legislature. Nearly 600 delegates of the National Assembly are meeting behind closed doors on Saturday with the focus of the gathering being economic and budgetary matters.

It is also expected that Raul Castro will close the session with a speech that will be partially or totally published in the coming days.

The last time the full parliament met was in late March when it unanimously approved a new foreign investment law, which seeks to kick start the ailing economy with the arrival of capital from abroad.


10 thoughts on “Cuba: “End of Dual Currency Won’t Hurt the Population”

  • July 10, 2014 at 10:49 pm
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    Ah! memories of the Glens of Scotland!
    Glen Livet, Glen Dronach, Glen Grant, Glen Fiddich, Glen Avon, Glen Garioch, Glen Morangie but with the crown belonging to The Macallan produced at Craigellachie on Speyside.
    We must excuse people like Brrr and Mr. Goodrich for their insensitivities arising from ignorance of the realities of life in Cuba for Cubans and infected by worshipping at the shrine of Socialismo. They are the types who wear Che Guevara shirts – perhaps to commemorate the over 350 Cubans shot without trial and under his supervision at El Morro.

  • July 10, 2014 at 7:21 am
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    “Let them drink TuKola”

    As a comparison, the minimum wage where I live in Ontario is $11 per hour. Which works out to $132 for a day & a half of work. Could you imagine what the average Canadian would think of paying $132 for a bottle of low quality soda pop? Hell, I won’t pay that for a bottle of fine single malt scotch!

    Brrr’s comment is as uninformed as it is insensitive.

  • July 9, 2014 at 7:15 am
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    The system you credited to Minister Rodriguez was ordered and approved by Fidel. The flaws of the scheme were obvious to any economist at the time, yet they went ahead and did it anyway. The negative consequences were predictable and inevitable. Now that they have screwed up the Cuban economy, they will try another scheme. But so long as the Cuban economy is base on central planning and some perverted form of “socialism” the economy will continue to fail.

  • July 9, 2014 at 12:43 am
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    A TuKola only costs one CUP – ie: one and one half days pay for the average Cuban. Brrr obviously thinks that it is a bargain.

  • July 7, 2014 at 3:26 pm
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    It is hideous and disgraceful that the gobbeldy guck described in the article is the reality of Cuba under Socialismo and the Castros. It is worthwhile to remember George Orwell’s book 1984. It is also significant that he as a socialist who fought for the left in the Spanish Civil War, later recognized the evil that could arise from the pursuit and practice of socialism.
    BIG brother is watching
    Little brother is in control
    Viva Fidel
    Viva Raul
    Viva los Castros
    Que controla toda y todos

  • July 7, 2014 at 5:50 am
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    Imported goods cost more, what else is new? Buy a TuKola instead.

  • July 7, 2014 at 2:46 am
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    People’s purchasing power depends on three main items:
    – salary levels: way too low
    – prices: way to high especially those in TRD’s where high taxes are added to high margins
    – the exchange rate versus foreign currencies (dollar, euro) that determines how many CUP one gets for a dollar.

    Now the “fictional” value of the CUP versus the dollar is 25 CUP per dollar.
    If the Cuban regime touches this the 65-70% of Cubans that receive remittances and those that get income or tips in foreign currency will suffer.

  • July 6, 2014 at 8:33 am
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    The former economy minster jose Luis Rodriguez (who designed the dual currency system) left the government five years ago and now concedes the dual currency system was a mistake because it denied Cubans access to imported goods (https://sg.finance.yahoo.com/news/cuba-currency-reform-3-years-172800920.html).

    As for the quote “people’s purchasing power will be respected”, it’s a joke because Raul Castro has said over and over again that current wages are insufficient to satisfy the average cuban’s basic needs, but he says that productivity must rise before wages can skyrocket by 900 percent

  • July 6, 2014 at 6:51 am
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    Today in Havana, a single can of Coca-Cola costs $1.50 and the average State salary is nearly $25.00. This means a Cuban needs to work all day to buy a soda. After the elimination of the CUC, Cubans will still have to work all day for a Coke. So you see, Cuban purchasing ‘power’ will be respected.

  • July 5, 2014 at 8:02 pm
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    Quick question: now that the Cuban government admits the dual currency scheme was an unmitigated disaster, what will happen to the idiot who introduced the scene in the first place?

    “People’s purchasing power will be respected” …? Is that some kind of cruel joke?

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