Cuba Prepares For 'Profound Transformation' Of Its Monetary System
Cuba Prepares For 'Profound Transformation' Of Its Monetary System, Urges Calm
Oct. 13, 2020, By Reuters
President Miguel Díaz-Canel said last week the country would end up with a single currency and exchange rate with the dollar, but did not specify a rate or the date of devaluation.
HAVANA—Cuba’s economy minister has urged calm as the government prepares to unify its dual currency system and multiple exchange rates in hopes of improving economic performance. The Caribbean island nation is undergoing a crisis caused by an onslaught of new U.S. sanctions on top of a decades-old embargo, the pandemic and its inefficient Soviet-style command economy.
Alejandro Gil, speaking during a prime-time broadcast on state-run television on Monday, said the country could not overcome the crisis without unification which he said included wage, pension and other measures to protect the population.
“It is a profound transformation that the economy needs that will impact companies and practically everyone,” Gil said.
“It is for the good of the economy and good of our people because it creates favorable economic conditions that will reverberate through more production, services and jobs,” he added.
The monetary reform, expected before the end of the year, will eliminate the convertible peso while leaving a devalued peso, officially exchanged since the 1959 Revolution at one peso to the dollar.
The soon to be removed convertible peso is also officially set at one to 10 pesos to the dollar for state companies and 24 pesos sell and 25 pesos buy with the population.
The government has stated numerous times that residents will be given ample time to exchange convertible pesos at the current rate once it is taken out of circulation and banks will automatically do the same with convertible peso accounts.
President Miguel Díaz-Canel said last week the country would end up with a single currency and exchange rate with the dollar but did not say what that rate might be or the date devaluation would happen.
Foreign and domestic economists forecast the move will cause triple digit inflation and bankruptcies while at the same time stimulating domestic economic efficiency and exports over imports.
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