Cash-strapped Cubans fret over dual currency

Cash-strapped Cubans fret over dual currency

A Cuban shows Cuban Pesos CUP (Left hand) and Convertible Pesos CUC
(Right hand), on October 22, 2013 in Havana. YAMIL LAGE/AFP/GETTY IMAGES

HAVANA - "The decision to unify Cuba's dual currency and exchange rate
cannot be postponed," says Joaquin Infante, advisor to the head of the
Cuban Association of Economists.

The interview with Infante touches on one of the hottest issues of
concern to Cubans who have to cope with wages that have not kept up with
the cost of living particularly in the last decade. Most affected are
public employees who still make up the majority of the labor force and
retirees living on government pensions that are insufficient to cover
even basic necessities such as food, electricity, and cooking gas, much
less a new pair of shoes.

So Cubans constantly ask when the currency unification will take place
and what it will mean for their budgets.

Unfortunately, like previous information in the local media, the
interview published on the back page of the official daily Granma Monday
only partially answers those questions.

Infante says "the currency and exchange rate unification in the state
sector should not be put off," while, on the other hand, he says the
unification on the street level--that is among the population--should be
"more gradual" but offers no solid time framework.

He did add that the elimination of the dual currency "would not in
itself increase people's purchasing power." Instead, he said, the value
of the surviving Cuban peso currency "will be linked to increased
productivity, labor efficiency, and the profitability and competiveness
of Cuba's production."

"I've heard that before," says Hugo, a food services worker who recently
quit his job in frustration. "I never get ahead and depend on money sent
by my son who lives in Spain and tips, its degrading," he concluded. He
refused to say what he would do to earn a living now but hinted that he
would sell his car and possibly his home, an indication that he might be
planning to leave the country.

Patricia, an emergency room doctor, worries just when the peso in which
she is paid will become the single currency.

"Will I be able to afford to buy new clothes for my 14-year-old daughter
and to give her money to go out to have fun with her friends or will
things still be as expensive as they are now?" she asks.

She is left with this concern even though medical professionals are much
better off than the other state-employees, having recently received a
100 percent salary increase due to the profitability of medical exports.

"I'm putting money away in the bank but I'm not sure what it will be
worth in the future," she fretted.

Infante doesn't address these concerns sufficiently, says a former
diplomat now working in hotel management, who asked not to be identified.

Infante blames the existence of the dual currency on Cuba's "extreme
dependency on foreign trade and limited hard currency reserves, as well
as the U.S. economic and trade embargo and price fluctuations on both
imports and exports on the international market." He further says the
dual currency exchange rate "doesn't permit a realistic vision of
production costs, distorts the information for doing feasibility studies
and evaluating investments and can undervalue imports and exports."

Strategically, according to Infante, it's most important to implement
the unification on a macro-economic level in the state sector where the
duality has been maintained due to "excessive centralization of
operating decisions, the formal character of finances and economic
management by administrative decisions rather than by financial and
economic indicators."

And, he notes, another problem is that not all Cuban Convertible Pesos
(CUC) issued are backed by hard currency, resulting in the creation of
something called Letter of Liquidity to identify CUCs that have actual
convertible currency behind them.

A young state-agency tour guide hoping to get married and start a family
soon shrugged after reading the article. "It's just more gobbledygook,"
he said before asking that he not be named because he didn't want to get
into trouble at work.

"I depend on the tips as I make as a guide to live," he said. "I'm sick
of hearing about all the reasons we can't be paid more, all the problems."

Most of all there is a unanimous complaint that the local media is not
adequately covering the issues of greatest concern to people. Many say
that Cuban TV news segments such as the weekly "Cuba Dice" (or "Cuba
Speaks") provide only superficial treatment and provide little or no
follow-up.

Source: Cash-strapped Cubans fret over dual currency - CBS News -
http://www.cbsnews.com/news/cash-strapped-cubans-fret-over-dual-currency/