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News > Cuba

Price, Salary Increases As Cuba Unifies Currency, Exchange Rate

  • Cuban ministers Marino Murillo Jorge and Alejandro Gil Fernandez discuss the upcoming monetary and exchange rate unification process taking place in Cuba. Havana, Cuba. October 13, 2020.

    Cuban ministers Marino Murillo Jorge and Alejandro Gil Fernandez discuss the upcoming monetary and exchange rate unification process taking place in Cuba. Havana, Cuba. October 13, 2020. | Photo: Twitter/@RadioRelojCuba

Published 13 October 2020
Opinion

The announcements and explanations came during tonight's Mesa Redonda television program as one of many ongoing updates in Cuba's economic recovery and reform plan for the post-COVID period. 

The Head of the Guidelines Implementation Commission of the Communist Party of Cuba (CCP), Marino Murillo Jorge, and Economy and Planning Minister Alejandro Gil Fernandez explained to the Cuban population Tuesday night many of the mechanisms behind the upcoming and much-awaited monetary and exchange rate unification process in the Caribbean island nation.

Tuesday's broadcast forms part of a series of round table conversations with government officials and ministers over the next few weeks to explain new economic measures and social reforms that Cuba will undergo to stimulate the economy, respond to ongoing concerns, and implement structural changes approved at the 6th and 7th Party Congresses.   

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In his intervention, Murillo reiterated that the monetary unification process is gradual, interdisciplinary, and transversal, meaning that it affects every sector of Cuba's economic and social life. As such, he assured that the process for eliminating the convertible peso (CUC), devaluing the Cuban peso (CUP), and unifying the country's two different exchange rates for the population and the state business sector is an essential and urgent task so that all of the other approved and pending economic reforms can have a positive impact. 

While Murillo did not announce the specific date for the unification nor the new exchange rate for the CUP, he clarified that once announced, Cubans will have many months to either exchange or spend their remaining CUC, and that bank accounts in CUC will be automatically converted into the local currency at the new rate. 

Of particular interest were clarifications that once the unification occurs, there will be a fivefold salary increase for state workers, a similar increase for pensioners, and an undisclosed increase for social assistance programs. This is mostly because prices, Murillo explains, will inevitably increase as the currency devalues and imports become more expensive than national products, which is not currently the case.  

Assuring the population that these measures constitute neither shock therapy nor market economy measures, Murillo explained that vulnerable families would continue to receive ample governmental support, and nobody will be left behind. That said, the economic restructuring is designed to increase work productivity, eliminate unjustified or excessive subsidies, incentivize and increase exports, and stimulate productive chains in the national economy so that state enterprises purchase from Cuban suppliers instead of foreign ones. 
 
Furthermore, Murillo insisted that Cubans must work to live, hoping that these changes, not by any means some "magical solution," will make state enterprises more efficient and competitive, with the ability to distribute profits to its workers similar to Cuba's cooperative sector. This, Murillo explained, will allow a workers' salary to cover their basic costs of living, which—currently organized through a ration system—will be transformed to include more goods and services, eliminate others, and provide differentiated access based on need. 
 
Highlighting the overly administrative assignment of foreign currency in the economy and the distortions in firms' accounting, Murillo insisted that the monetary unification and concomitant reform processes will allow market signals to ascertain which enterprises are profitable or not, permitting decreased state responsibility for sinking entities while continuing to subsidize those who produce essential goods for the population.
 
Among other clarifications to come in the weeks ahead, Murillo assured the Cuban people that this ongoing quest for business efficiency, competitivity of Cuban products, labor productivity, and a decreased fiscal deficit would not lead to the mass unemployment, poverty, and hunger as seen in other neoliberal countries in Latin America. Rather, Cubans can expect a continued commitment from the government to support struggling yet essential state enterprises, vulnerable and low-wage families, and small-scale domestic producers to overcome the impacts of the COVID-19 pandemic and the escalated U.S. economic, commercial and financial blockade. 
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