After several years of procrastination, el dia zero (D-day) is approaching: the 1er January 2021, Cuba will unify its monetary system by abandoning one of the two local currencies. The monetary reform provides for the abandonment of the convertible peso (CUC), artificially aligned with the US dollar and initially reserved for the tourism sector. Only the Cuban peso (CUP) remains, at an exchange rate set at 24 pesos to the dollar.
A “High-risk economic overhaul”, valued Janette Habel, researcher at the Institute of Higher Studies of Latin America, specialist in Cuba. Through this new liberal reform, she explains to the World how the island has been completing its economic, political and social transformation for several years.
In what economic, social and political contexts is this long-awaited monetary reform taking place?
Many Cuban economists have been surprised at the time frame the government has chosen to implement reforms announced years ago. But I just think it was because there was no longer a choice. This is a sign of the gravity of the situation in Cuba, stunned by a deep economic and financial crisis due, in part, to the American economic sanctions still weighed down by the Trump administration, and to internal problems related to the economic structure of the country. country. The only national reference is the crisis suffered in the 1990s, following the fall of the Soviet Union, and today we can say that certain elements are even more serious than at the time.
It is also a difficult period politically as a generation – that of the Castro brothers – is disappearing for biological reasons. And, with it, the legitimacy of the revolutionary that President Miguel Diaz-Canel will never have. And even if he takes care to announce the reforms alongside former President Raul Castro, this past legitimacy must be replaced by institutional legality.
This is what was initiated with the signing, in 2018, of the new Constitution, which restores, for example, a post of prime minister. It is also delicate because the current government is in the throes of great dissension. The next congress of the Communist Party of Cuba [PCC], which is to be held in 2021, will appoint a new party leader – logically the current president in place of Raul Castro – and establish the legitimacy of Mr. Diaz-Canel.
Finally, it is therefore a gigantic national overhaul which comes at a time when the shortages have never been greater and the population is already very unhappy. In particular, the opening of these appliance stores in 2019, where you can only pay in dollars with a bank card. This assumes that Cubans have an account funded in currency, which is not the case for the vast majority of them. And the unification of currencies and exchange rates should only worsen these inequalities.
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