The Cuban government has sanctioned a policy that regulates the "partial dollarization of the economy," as declared by Prime Minister Manuel Marrero Cruz on Tuesday during the fourth regular session of the National Assembly. This move highlights the rising influence of the U.S. dollar in Cuba and aims, once again, to restructure crucial economic sectors while attempting to manage the impact of the informal currency exchange market.
The partial dollarization framework will encompass various sectors: both wholesale and retail trade in previously approved foreign currencies, as well as the payment of tariffs and services linked to foreign trade for non-state management forms. Additionally, cash in dollars will be accepted in strategic areas such as tourism, Casas del Habano, pharmacies, optical stores, international clinics, and airports. Furthermore, payments in foreign currencies will be made to agricultural producers who replace imports and to those manufacturing exportable goods.
According to the regime, this regulation will also allow for greater flexibility in the use of foreign currencies for specific economic activities like tourism and foreign commerce, which are crucial for generating income amidst the economic crisis.
Contradictions and Challenges
Despite this opening, Marrero emphasized that the government is striving to move towards de-dollarizing the economy. However, he acknowledged that informal dollarization is out of control, driven by a parallel exchange market operating outside official regulations. "There is a level of dollarization in the economy that has been uncontrolled, driven by the informal exchange market," he admitted.
The prime minister pointed fingers at the informal market and the private sector for setting prices based on this unofficial exchange rate, issuing a stern warning: no one can sell in foreign currency without explicit approval.
The communist regime faces an economic conundrum: the need to attract foreign currency while maintaining a policy of de-dollarization. This new measure marks a shift in economic strategy, attempting to mitigate the impact of the country's structural crisis and retain control over vital sectors, all while the dollar continues to gain prominence in the everyday lives of Cubans.
This policy underscores an inescapable reality: the dollar is solidifying its position as a key currency in a system struggling to sustain stability.
Understanding Cuba's Economic Partial Dollarization
What sectors are affected by Cuba's partial dollarization policy?
The policy impacts sectors such as wholesale and retail trade in approved foreign currencies, payment of tariffs and services related to foreign trade for non-state management forms, tourism, Casas del Habano, pharmacies, optical stores, international clinics, and airports.
Why is the Cuban government implementing a partial dollarization policy?
The government is implementing this policy to restructure critical economic sectors and manage the influence of the informal currency exchange market, acknowledging the growing role of the U.S. dollar in the economy.
How does this policy conflict with Cuba's de-dollarization goals?
While the policy aims to incorporate the dollar in strategic sectors, the government simultaneously seeks to reduce reliance on the dollar, creating a contradiction as it balances the need for foreign currency with de-dollarization efforts.