By Alejandra Garcia on August 25, 2022
photo/ Abel Padrón Padilla
Cuba is living a tense economic situation, aggravated by frequent blackouts, lack of fuel, medicines, food and other necessities. The best stocked stores in the country are those with values in Freely Convertible Currencies, known as MLC -for its acronym in Spanish- a type of currency that most of the people couldn’t afford until very recently.
The black market was able to take advantage of these shortages, all encouraged by the U.S. blockade, which hinders Cuba’s access to this type of currency, especially the U.S. dollar. For months now, people’s wages gravitated around the decisions of the informal market and the values it imposes on foreign currencies.
When in January, a piece of footwear could have cost US$35, an equivalent of 2,500 Cuban pesos, taking into account that each dollar was bought at 70 Cuban pesos in the black market, today, barely eight months later, the value has tripled due to the inflation imposed by the illegal trade. The same happens with the rest of the country’s goods and services.
In an effort to contain the constant price inflation and to favor the access of all Cubans, and not just a few, to freely convertible currencies, Cuban authorities announced earlier this month that they would start buying foreign currency at the rate of US$1 for the value of 120 Cuban pesos -the same exchange imposed by the informal market.
On Tuesdays authorities also began to sell them to the population based on the currency availability of the exchange houses. People will now be able to buy a maximum of $100 USD per person per day due to the very high demand.
“We want people to feel safe when exchanging or buying foreign currency, something that the informal market does not guarantee,” Cuban Economy Minister Alejandro Gil explained during a television appearance last Monday.
“We are in a fight for the recovery of the economy. And we need people to want to buy cash from us and to sell it to us, because those resources are used in the country’s socio-economic development,” he added.
Previously, these operations could also be done legally at the exchange rate of USD$1 for 24 Cuban pesos, which didn’t generate incentives given the higher informal exchange rate.
As Cuba cannot buy with dollars in the international market and neither make transfers with that currency due to the blockade, this is the best alternative to use the currency collected by the country.
“Salaries are not enough, that is a reality, so we want to stabilize the exchange rate so that people feel that their wages have worth,” Gil assured.
There is still much to be done. At the moment, only 37 exchange houses in the country are doing this type of operations. Since the measure started two days ago, the lines have been endless, and people spend more than 12 hours in line to buy the $100 or less.
However, authorities are optimistic and believe the country will achieve all of its goals step by step. When the official exchange market becomes sustainable in time, the measure will help to halt the abusive and uncontrolled increase of foreign currency in the informal market.
This is not an optimum solution but one made by the Cuban government to maintain control of the economic market motivated by what is good for the majority of Cubans.
Source: Resumen Latinoamericano – US