Cuba's Monetary Overhaul Task To Benefit Foreign Investment

Cuba's Ministry of Foreign Trade and Investment (MINCEX) announced on Monday its strategy regarding the Monetary Overhaul Task, which, according to the authorities will favor the economy as well as benefit foreign investment.

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During an interview on the state TV program Mesa Redonda, the Minister of Foreign Trade and Investment Rodrigo Malmierca reaffirmed that "enhancing foreign investment is a priority for the country and the main objective is that these investments integrate more within the national economy."

The Monetary Overhaul Task will start from January 1, 2020, as one of the two currencies circulating in Cuba at the moment, the Cuban Convertible Peso (CUC) will be eliminated. Instead, the country will use the Cuban Peso (CUP). Likewise, an exchange rate of 24 Cuban pesos for one dollar will be implemented.

These changes, according to Malmierca, will benefit the salaries of businesses with foreign capital as well as the investors.

"Suppose that the worker in question was paid $500, which was converted by two. Now, maybe it won't be $500, it won't be dollars, ultimately, it will be Cuban pesos. And with fewer dollars, perhaps the worker will receive a much more attractive salary. This means that in terms of wages, foreign investment will have benefits since it will be able to pay workers more by spending less foreign currency," the minister explained.

According to Cuban law, foreign companies have to hire personnel via a Cuban employing agency. This agency guarantees the worker's rights but discounts a part of its service from the employee's salary.

"Possibly most of the workers will receive better salaries because instead of two, the converter is now 24 and the salaries can be set in Cuban pesos according to the functions of each worker and he will receive it completely, without discounts at the employing agency," Malmierca highlighted.

According to the authorities, there are 40,000 workers employed in foreign investment modalities, and in 2020 alone, there were approved 29 foreign investment projects for more than $2 billion.

On the other hand, more than 30 projects, worth more than $3 billion are in an advanced stage of negotiation to be approved in 2021.