• Submitted by: lena campos
• Business and Economy
• 12 / 02 / 2013

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The unification of Cuba's dual currency system will take at least three years, the architect of the unpopular two-decades old policy of using dollars and convertible pesos has said.

The government announced last month that it would phase out the existing system as part of President Raul Castro's gradual attempt to streamline Cuba's Soviet-style economy.

Under current rules, a minority of Cubans who have dollars can buy convertible pesos (CUC) at a one for one rate, and use them to buy scarce goods in well-stocked special state stores.

Cubans' salaries, however, are paid in non-convertible pesos (CUP), which are valued at 24 to a convertible peso and do not go far in a country where builders, teachers and doctors, for example, are paid $20 a month.

Amid uncertainty about when the change will happen, Jose Luis Rodriguez, the communist state's minister of economy and planning between 1993 and 2009, said it would take time to devalue the exchange rate.

"This process will likely take at least three years," he said, referring to the need to first devalue the exchange rate for business transactions, and then secondly for private individuals.

Rodriguez said currency unification would "create the conditions for better management and measurement of the economy," but it involves a "profound structural change" for those providing goods and services in the country.

The government established the current system to steer hard currency into its coffers which it needs to buy bulk food on international markets for the country's 11 million population.

While Cubans enjoy almost free education and health benefits, housing and a subsidized food basket, most say they still struggle to put food on the table.

Source: Global Post.com